The AUDGBP exchange rate was sharply lower on Monday as the pound sterling saw strength across the board. The election risks in the country dissipated and that left traders free to consider the growth outlook for the economy as the country moved to its next phase of reopening and the BoE upgraded the country’s GDP forecast to 7.2%.
Australia was set to release its latest Federal budget with big spending plans aimed at securing the country’s recovery from the virus effects. The mining sector has boomed and that has kept the Australian economy afloat, although the country is playing a risky game of rattling China, its largest export partner.
The AUD to GBP trades at 0.5550 once again and the pair has bene locked in a range since late-January.
Big budget spending seen
The Australian government will announce its economic plan for the fiscal year ahead on Tuesday with the budget aimed at creating jobs and repairing the lockdown damage, while the package is weighted towards states that will vote in the coming elections.
Aussie treasurer Josh Frydenberg said the economy was already recovering and his economic blueprint for the year beginning on July 1st would build on that economic strength.
“Tonight’s budget will invest in infrastructure and skills to create more jobs and provide incentives to businesses to do what they do best, to hire, to innovate and to grow,” he said.
A deficit of 214 billion Australian dollars was forecast in the current fiscal year and that was revised down to AU$109 billion in December. Economists now expect an even smaller deficit of around AU$80 billion to be forecast Tuesday, with the high iron ore prices paid by China stimulating the country’s bottom line.
British virus forecasters backtrack
Britain’s doom and gloom virus forecasters have now said that Britain will not face deadly third wave of the coronavirus, with new data suggesting that the fatality rates are likely to be five times less than previously estimated.
The news came as Prime Minister Boris Johnson announced the latest reopening stage for May 17th, with the UK now seeing a return to larger gatherings at indoor and outdoor events, with outdoor venues getting the greenlight to host live events with larger crowds. Cinemas, sports and indoor seating at pubs and restaurants will also be reopening from May 17th alongside the UK’s new travel ‘green’ list.
Australia has already said that they will not accept UK travellers as the country’s borders remain shut until 2022. This was another reason for the drop in the Aussie dollar on Monday as the tourism sector and hospitality sectors of Australia will see no new money until next year.
The AUDGBP pair has been stuck in the current trading range and every breakout seems to be met with a switch in the balance of power between sterling and the Aussie dollar. The two counties are among the strongest in the G20 for 2021.