The AUDGBP exchange rate was lower by -0.06% on Wednesday after state of Victoria lifter its lockdown but kept some restrictions on travel. Westpac consumer confidence was also lower by 107.2% as Aussie consumers ran out of steam. This week will see a UK GDP update on Friday.
The AUD to GBP rate is trading at 0.5463 and may consolidate until Friday’s data release.
Melbourne out of lockdown but restrictions remain
Around five million Australian residents will come out of lockdown on Friday after authorities in Melbourne, the country’s second largest city, said the coronavirus outbreak had “changed the course”.
However, travel restrictions will remain in place between the city and other regional areas for another week, despite the state recording only one new Covid infection on Thursday. After the two-week lockdown was lifted, restaurants and cafes will be allowed to open with a limited number of indoor customers.
The continued lockdowns have hurt Australia’s economic recovery by making consumers more nervous and less likely to spend money, according to analysts.
Westpac chief economist Bill Evans said the consumer sentiment reading was hurt by the lockdowns this month.
‘The latest fall in June is almost certainly due to concerns around the two-week lockdown in Melbourne,’ he said.
“That resilience in NSW, our largest state, will be very important for supporting national sentiment and, in turn, sustaining the economic recovery,” Mr Evans added.
The Westpac-Melbourne Institute monthly figure fell by 5.2 per cent in June in a sign that the consumer bounce may have peaked.
UK GDP waits on Friday
The UK will see the release of the latest GDP monthly update on Friday and that could be key for the prospects of the Aussie versus British Pound. The pair is drifting lower again on the day with the pair trading at 0.5460 and the yearly lows near the 0.5420 level.
Over 76% of UK adults have now received one dose of the vaccine in the UK and that has helped th sterling outlook, but the talk of a delayed reopening to the 21st June roadmap is weighing on the pound.
In Brexit related news, eurocrat Charles Michel has threatened to place trade sanctions on Britain unless Boris Johnson backs down in the Brexit row over Northern Ireland.
The European Council President said that lawmakers were reviewing the “tools at our disposal” if the Prime Minister refuses to implement new red tape from Brussels in the region. The news comes ahead of a meeting of top UK and EU officials in London on Wednesday. Speaking at the European Parliament in Strasbourg, Mr Michel said: “We believe deeply in the rule of law. Pacta sunt servanda – when agreements are reached, they must be implemented in good faith.”
The AUDGBP could be quiet for the next two trading days unless headlines regarding the virus take hold.