The AUDGBP exchange rate was trading at the 0.5394 after the dollar got a lift from higher Westpac consumer confidence data. The pound had advanced to another yearly low after inflation was seen rising in the UK, but a surge in virus cases has also tempered gains in sterling.
The AUD to GBP pair will see the release of unemployment figures for both countries today.
Westpac data steady, UK inflation surges
Westpac Consumer confidence in Australia was steady in July, according to the latest survey on Wednesday from the bank. The sentiment index gained 1.5 percent to 108.8, up from 107.2 in June.
Confidence has held up overall despite a sharp fall in NSW as further virus restrictions hampered the recovery. However, concerns around the current virus outbreak and restrictions in NSW are not being seen in the rest of the country. This is in contrast to Victoria’s ‘second wave’ outbreak in August 2020, which weighed heavily on consumers across the country.
In the UK, inflation rose to its highest level in three years with the country posting a 2.5% rise in prices, compared to analysts’ expectations for a 2.2% gain.
Consumer prices have accelerated with the easing of coronavirus restrictions, while higher energy costs are also a factor. The ONS revealed the latest figures a day after inflation in the US soared to 5.4%.
“Inflation rose for the fourth consecutive month to its highest rate for almost three years,” said ONS analyst Jonathan Athow.
UK weighed by surging virus variant cases
The UK is seeing another surge in virus cases with the latest figure over 42,000 being the highest since January.
Alongside this, 1,200 medical professionals wrote to a medical journal to ask the government to halt the July 19th removal of all restrictions. That is placing a headwind on the British pound after the Sydney lockdowns had done the same for the Aussie dollar.
The day ahead sees the release of the latest employment data from Australian and the UK in what ould be a deciding factor for the pair this week. The Aussie economy is expected to post a gain of 30k jobs for June, which would be lower than May’s 115k. But traders will watch closely as the unemployment rate is expected to slip to 5%. Some analysts are predicting that the rate may move under that level and that would pressure the RBA, who have said they will wait for full employment to raise interest rates.
For Britain, the market expects an additional 90k jobs for the economy, which would be down from 113k last time out. A swing in the pound’s favour could see new lows for the pair this year, but the Australian dollar is seeking to get back above the 0.5400 level now.
The AUDGBP saw lows of 0.5399 on the 22nd of October 2020 and this is the level that the AUD to GBP bulls hope will hold out in coming sessions.