The AUDGBP exchange rate is 0.15% lower on Wednesday after inflation figures down under showed a surprise cooling in prices. The Aussie economy has been red-hot, but the inflation numbers stayed soft with a 1.1% gain compared to an expected 1.4% rise. The state of Perth has emerged from a snap three-day lockdown after a few virus cases were found at a quarantine hotel which has seen the facilities branded as “not fit for purpose”.
The AUD to GBP trades at 0.5575 and after yet another failure at the 0.5600 level, the pair could move lower.
Government programs see prices dip
Australian consumer prices were softer than expected in the first quarter after government programs took some of the heat out of costs.
The mean core inflation figure was 0.3% higher than Q4, against estimates for a 0.5% gain, according to the Australian Bureau of Statistics. The other gauge saw a 1.1% in the first quarter from the year previous, with a 1.2% increase.
Analysts said that government programs helped to lower some of the costs in the economy with the likes of the government’s HomeBuilder grant, and similar grants within states, helped to lower costs in the housing market.
The numbers will be a boost for the Reserve Bank of Australia who have been coming into the spotlight again lately with the strong gains in the economy. There were fears of further inflation rises and pressure on the bank to shorten its path towards the next rate increase in the country. The bank has said 2024 would be the date but recent strength made that look hopeful. The softening of prices will remove the talk of tapering bond purchases in the near-term.
UK growth could be better than expected
Economists at the EY ITEM Club have given the British economy a boost by suggesting that GDP growth will be the strongest since the second world war. The forecasts come after a similar statement front eh US investment powerhouse Goldman Sachs. The bank said that they were bullish on the British recovery and said that it could produce “striking” growth, which could even be more than 7%.
The UK economy did slump to its worst performance in three hundred years, but the recovery would be strong and put the UK in pole position amongst the G7 countries, including the USA. The next talking point for the Bank of England would likely be inflation as the US economy saw its March numbers higher.
The BoE saw UK growth at 5%, but the vaccination rates picked up and the estimates are being adjusted at the same time as the economy opens up fully. The UK still has some underlying issues in the jobs market that are being hidden by the furlough scheme.
The AUDGBP has struggled to get above the 0.5600 level on a few occasions now and may look to test the lower levels after the recent rejection.