The AUDGBP exchange rate was lower last week as the lockdowns continue in much of Australia, while the UK sees a further reopening. Australia’s rebound from the virus lockdown damage has been derailed by the latest restrictions and Aussies are growing more discontented with ant-lockdown protests growing.
The AUD to GBP pair trades at 0.5350 after seeing new lows for the year in the last week.
Australian’s defy lockdowns for protests
Protests against ongoing lockdowns and health passports are continuing across Europe and Australian’s also defied the latest lockdowns to protest the government’s actions. Government spokespersons are increasingly critical of the protests but there is a real growing risk of political instability as the tide turns against lockdowns.
Thousands of people took to the streets of Sydney and Melbourne on Saturday to protest lockdown restrictions despite another surge in cases. Greater Sydney has been locked down for four weeks, with residents only able to leave home with a reasonable excuse.
“We live in a democracy and normally I am certainly one who supports people’s rights to protest … but at the present time we’ve got cases going through the roof and we have people thinking that’s OK to get out there and possibly be close to each other at a demonstration,” said Health Minister Brad Hazzard.
Prime Minister Scott Morrison also criticized the protests but there is rising discontent amongst many nations with protests over the weekend in Ireland, the UK, France and Italy. There is a real chance that the protests could escalate in the weeks ahead.
Australian inflation set to soar this week
Wednesday will see the release of the latest inflation figures for the Australian economy and the number is expected to surge to 3.8% from 1.1%.
In its latest analysis of the Australian economy, the global ratings giant Fitch said, “If higher inflation and interest rates over 2021-2023 modestly exceed our baseline projections, this could be credit positive for the sovereign and banks.”
Analysts added: “Recent lockdowns mean that growth this year will be lower than the robust levels we had previously projected, but we still expect inflation to pick up sharply.
The labor market has tightened much faster than we had expected, and wage-growth acceleration presents upside risks to inflation, meaning that monetary policy may be tightened further and faster than we project in our baseline assumptions.”
The Reserve Bank of Australia has said that there won’t be a rate hike until 2024 but rising inflation could put pressure on that projection. The latest lockdowns may take some of the sting out of inflation but the trend is up for prices in the largest global economies. Mortgage numbers will be the only UK data released this week and the pound is seeing support with virus cases dropping for a fifth day.
The AUDGBP has been under heavy pressure with the latest lockdowns and there is a lack of bullish news for the Aussie dollar at the moment.