The AUDGBP exchange rate was lower after the latest Sydney lockdown. The city was shut down for two weeks after reporting cases of the Indian variant. Economic data also saw house prices surge in the UK, although that was boosted by the removal of the stamp duty benefit this month.
AUDGBP is trading at 0.5427 and the Aussie dollar could see action with the release of trade balance figures.
Australian economy will be weak according to economists
A group of 23 leading Australian economists met to take part in The Conversation’s July 1st forecasting survey, with a panel that includes former Treasury, Reserve Bank and IMF officials, as well as policy specialists from 13 Australian universities.
Overall, the panel expects average economic growth to slide from 4% this financial year to just 2.2% by 2024-25, well below the average of 2.6% assumed in this week’s intergenerational report.
The panel sees much weaker business investment than the budget and lower household spending, but higher wage growth and lower unemployment. It expects share prices to be flat, with slower growth in house prices.
Economic modeller Janine Dixon expects growth of just 1.7% for Australia and says that the country has soaked up unemployment, but future economic growth can only be driven by population growth or improved productivity.
With population growth expected to be weaker for several years, GDP growth will also be weak unless productivity growth rebounds.
Other economists said the country would enjoy an “artificial boost” to domestic spending of more than $50 billion per year while Aussies are not allowed to go abroad.
Haldane warns on UK inflation risk
Britain faces a ‘significant and persistent’ rise in inflation that could force the Bank of England into a ‘handbrake turn’ on interest rates, its outgoing chief economist has warned.
Andy Haldane, who has left the BoE after 32 years, said the economy was “surfing as high a wave as any in its history”.
“By the end of this year, I expect inflation to be nearer 4 per cent than 3 per cent. ‘This increases the chances of a high inflation narrative becoming the dominant one, a central expectation rather than a risk.”
He added: “If this risk were to be realised, everyone would lose – central banks with missed mandates needing to execute an economic handbrake turn, businesses and households facing a higher cost of borrowing and living, and governments facing rising debt-servicing costs.”
Haldane had been at odds with other members of the MPC in the past and was early to warn of the “inflationary tiger” that is now stalking the world’s largest economies.
Trade balance figures are released for the Aussie economy and are expected to show growth in Australia’s trade picture with A$10bn for May, which is up from £8bn in the previous month.
The AUD to GBP exchange rate saw lows at 0.5400 on the 22nd of June and now trades only 20 pips higher.