The AUDGBP exchange rate was 0.06% higher on Thursday as the pair bounced from the 0.5460 level, but the Aussie dollar has failed to capitalise on the support. The Australian dollar has been under pressure from a slump in iron ore prices and the pound has struggled with the rise of the Indian variant in the country.
The AUD to GBP rate has support at the 0.5460 level and resistance is initially at the 0.5500 level.
Business investment boosts Aussie dollar
Australian business investment increased by the most in a decade during the first quarter as businesses were boosted by tax breaks for machinery.
The latest figures from the Australian Bureau of Statistics showed capital expenditure jumped by 6.3% in the March quarter to A$31.5 billion. The latest figure was above market forecasts of a 2% increase and was also the largest since 2011, which suggested that forecasts for gross domestic product may move higher.
Spending on plant and machinery surged 9.1%, with investment in buildings higher by 3.8%. The numbers are important for the mining industry and export-led economy.
“The non-mining sector out-performed the mining sector, which will be a welcome development for policymakers – new capital will embody the latest technologies, which in turn will improve the productivity of the labour force,” said Sarah Hunter, economist for BIS Oxford Economics.
Australian Sky News hits government
The state of Victoria has moved into another lockdown and it has less to do about public health and more to do with “protecting politicians”, said Sky News host Chris Kenny.
Victoria will see a state-wide seven-day “circuit-breaker” to stop the spread of another quarantine outbreak, which has failed to spread between two or three people in the past.
Kenny said: “The Victorian government… is running a de facto elimination strategy, afraid any infections will count as a political strike against them. So, they put the pain on people, onto families, on workers, on especially casual workers, on communities, the politicians shift all the pain onto those people, to protect their undeclared virus elimination strategy.”
The Australian and British governments are both under pressure for their virus efforts with former aide to Boris Johnson Dominic Cummings slating his former bosses in a presentation to MPs. Cummings said Boris Johnson, his ministers, and especially Health Secretary Matt Hancock fell ‘disastrously short’ as they grappled to deal with the pandemic.
The statements add some political instability to the AUD v GBP pair and adds a headwind to potential sterling gains as the Aussie dollar struggles with the slump in iron ore prices. The economic calendar is quiet for the rest of the week and traders will keep an eye on the Chinese comments regarding ore exports from Australia.
The AUDGBP pair saw a bounce at the November 2020 lows at 0.5460 and this has the potential for a bottom in the pair in a quiet week for economic data.