AUDGBP Looks Weak but Lacks Catalyst for a Move

AUD GBP Trades Above 0.5300 Ahead of Consumer Confidence

The AUDGBP exchange rate is 0.15% lower on Thursday morning as the pair sees the pound growing in strength again. The Australian and British economies have no further data out this week and the pair may drift into the weekend unless there are political headlines.

The AUD to GBP trades at 0.5575 could look to move towards the 0.5540 lows from last week for support.

Perth releases latest restrictions

Western Australia’s premier Mark McGowan will set out the latest rules for the state on Saturday with mandatory masks still expected with zero coronavirus cases in the state.

The Australian government’s approach has been quite heavy-handed lately with only a few cases in the country, but these are usually at quarantine locations and are spotted early. Perth was just released from a three-day snap lockdown last week over three cases emerging in a quarantine facility.

Australia is still managing to see strong economics, but one of the worst virus vaccination programs, so things could improve for the country as the year continues. Australia was hurt by an over-reliance on particular vaccinations and led to the government scrapping their schedule.

Aussie treasurer Josh Frydenberg has been talking ahead of the upcoming budget in Australia.

He noted that the country had been in a strong position prior to the virus, but is likely preparing for measures in the budget that will stretch government deficits even further.

Like his counterpart in the UK, Rishi Sunak, Frydenberg will have to look for ways to support the fragile areas of the economy with soaring debt levels however the UK has a larger hole in this respect.

China hits back after recent criticism

China’s top envoy to Australia has hit back at recent criticism from Australia as the two sides still suffer from trade tensions.  Cheng Jingy said it was “ridiculous” to blame Beijing’s economic coercion on the cause of trade tensions between the two countries.

He also warned the country against “teaming up” with other countries, in an apparent dig at the country’s relations with the likes of the US and said Australia should avoind the “victim game”.

The government in Canberra were active in blocking Huawei over the 5G concerns, while it also critcised China over the virus and more recently, looked to tear up the Belt and Road agreements with China.

China slapped tough tariffs on some Australian goods over the last year and that dragged in some export sectors, but China’s thirst for iron ore has supported the Australian economies strong recovery. It is still a concern that China could take further action if no change is seen to the diplomatic relations between the two countries.

The AUDGBP has struggled to get above the 0.5600 level in recent weeks, but the British pound has also seen buyers disappear, so the pair is drifting at the moment and needs a catalyst. Both countries should lead the developed economies in the 2021 GDP picture, alongside the US.