The AUDGBP exchange rate was -0.12% lower on Wednesday after the state of Victoria extended its lockdown. The latest lockdown in Victoria will be extended for a further seven days.
The AUD to GBP rate is trading at 0.5466 after sterling forced new lows of 0.5429 for the year last week.
Fourth Melbourne Lockdown Extended
The latest pandemic lockdown in Australia’s second largest city has been extended for a second week due to concerns over rising cases of the coronavirus.
Victoria state acting premier James Merlino said that Melbourne will remain in lockdown for a further week from Friday, but restrictions will be eased elsewhere in the state.
Mr Merlino said that “if we let this thing run its course, it will explode”.
The government has said that the latest increase in cases is down to the Indian virus variant, despite the country’s borders being shut for months.
The latest lockdown is a head wind for the strong economic recovery seen in Australia, but the UK economy is seeing a similar plight and AUD to GBP traders have seen a rollercoaster for the pair over the last months.
The latest lockdown is the fourth for Melbourne, which has over five million residents.
Australian Economy at Pre-Virus Levels
Australia’s economy has continued to see a strong rebound, with GDP larger than it was before the pandemic.
Official figures showed that gross domestic product in Australia rose by 1.8% in the first quarter, which beat market expectations. GDP was boosted by soaring demand for commodities around the world, and also from spending by consumers and businesses. Rising household spending was driven by record savings, while higher investment by businesses added to the higher prices of iron ore and gas, which helped to create the expansion, according to the ABS.
The country’s recovery was helped by lower levels of the coronavirus, which boosted consumer and business confidence. Large government spending packages and economic stimulus from the Reserve Bank of Australia have also helped to strengthen the rebound.
Despite the strong recovery, Australia’s central bank has held interest rates at record lows and signalled that it would keep borrowing costs down into 2023 to help spur the country’s economic recovery.
The RBA announcement was the sixth meeting in a row for record low interest rates at 0.1%, as policy-makers stubbornly stick to their targets for inflation and rises in wages and house prices.
The country’s slow vaccine rollout has been an issue for the Aussie dollar and the latest lockdown in Melbourne has weighed on the Aussie currency.
“An important ongoing source of uncertainty is the possibility of significant outbreaks of the virus, although this should diminish as more of the population is vaccinated,” RBA Governor Philip Lowe said on Tuesday.
The AUDGBP has managed to jump above the support level at 0.5460 as traders see the UK as being in a similar situation to Australia and are not betting too heavily against the Aussie dollar.