The AUDGBP exchange rate was 0.50% lower on Tuesday after the pair’s latest failure to get above the 0.5600 level. Stronger PMIs from the British manufacturing sector helped to bring support for sterling and it now trades near 0.5550 with the latest Bank of England policy meeting ahead on Thursday. Perth, Australia narrowly avoided another snap lockdown after another quarantine hotel outbreak.
The AUD to GBP saw yearly lows at 0.5477 on April 1st but bounced higher from there as big traders bailed on the pound.
New restrictions for Perth
Perth Australia narrowly dodged another snap lockdown over virus cases at a quarantine hotel, but the Premier did impose restrictions. Mark McGowan said on Sunday that there would be no lockdown. Despite this, he also said that Perth will not allow spectators during the Sunday afternoon Western Australia football derby, which was expecting a 45k crowd.
McGowan said the move would assist contract tracers and authorities had already cut the capacity by 25% at Optus stadium.
McGowan said: “I understand people will be disappointed. Some people will be frustrated, but the decision has been made on health advice, and we’ve tried to communicate this as quickly as possible”.
The Australian rules have been quite harsh despite very low cases numbers and Australian’s are getting weary of the call to action with every case. The reality is that the hotels are cordoned off and the spread hasn’t gone far beyond the walls with all of the testing procedures.
Bank of England follows RBA
The Bank of England will follow the Reserve Bank of Australia with another interest rate decision and the statements may be similar. The RBA dismissed talk of any stimulus removal and said they would focus on seeing long-term improvements to the jobs market. The MPC may use that excuse also to keep markets complacent about policy tightening.
The bank will also follow the RBA by keeping its key rate at 0.1% as central banks are happy to keep borrowing rates locked at low levels to support the early growth stages of the recovery. The Aussie economy saw its JobKeeper support programme wound down, while the BoE has the cushion of the extended furlough scheme, so it may be a while before the bank does any meaningful tapering.
Strong manufacturing PMIs have helped the pound this week, but it was always the service economy that mattered to the UK and with the retail and hospitality establishments slowly opening, that too will need time to see organic growth and hiring beyond an initial bounce. Australia will see its own services update in the morning and that could move the currency rate on Wednesday. Last month’s number was 55.5 and the snap lockdowns haven’t been too hard-hitting for services, although they haven’t been helpful either.
The AUDGBP pair has traded in the current price area since late-January and the pair has been unable to see a clear trend as the economy and virus situation has swung in both countries.