The AUDGBP exchange rate was -0.10% lower in early trading after yet another lockdown in Melbourne. The week ahead will see no major economic data released for the pound or Aussie dollar and the rate will hinge on the headlines regarding the virus.
The AUD to GBP pair trades at 0.5366 and the UK is lifting all virus restrictions, while the Australian government is going the other way.
UK employment data boosts sterling
Australia’s two largest cities are staying under coronavirus restrictions as Melbourne extended its five-day snap lockdown designed to slow an outbreak of cases.
“These restrictions simply cannot end at midnight tomorrow night,” Victoria state premier Daniel Andrews said.
Around 12 million people are now under lockdown in Melbourne and Sydney after a month of restrictions failed to crush the latest outbreak of the virus variant. That figure is half the population of Australia and will have serious repercussions for the country’s economic growth and other figures, such as consumer confidence.
New South Wales state reported 98 cases, down from 105 a day earlier.
“That 20 number is the number we are really keen to nudge… the closer we get that number to zero, the sooner we can end the lockdown,” NSW state Premier Gladys Berejiklian said during a media conference.
In the UK, the government are moving forward with plans to lift all virus restrictions today in the so-called ‘freedom day’. Ironically, Prime Minister Boris Johnson will miss it as he isolates until 26th July after the health secretary tested positive. This is despite Johnson having the virus previously and being vaccinated.
Aussie economy to bounce back?
Sky News contributor Peter Switzer said the economy should experience a “strong comeback” following Sydney’s lockdown.
“Economists like myself have pretty positive outlooks on the Aussie economy, not expecting a lockdown in Sydney that could last seven weeks, that would cost the economy $7 billion. The quarter that we’re in now, it will be probably negative and as a consequence that’s a bit of a surprise to both business and consumer confidence.
“But the interesting point we’ve found, once the lockdown is over, there is actually a very big rebound economic effect after it.”
The Aussie dollar was lower last week despite the most recent jobs data. The economy created 29 thousand jobs, ahead of the consensus estimates of 20 thousand. The gains helped push the unemployment rate lower to 4.9%, down from 5.1%.
The Reserve Bank of Australia used full employment as an excuse to ward off rate hike talk after the economic rebound but the most recent figures have seen unemployment plummet below 5%. Westpac consumer confidence was also better last week, but the figures are set to be upended by the latest lockdowns in Sydney and Melbourne.
The AUDGBP now trades at new lows for the year around the 0.5370 figure and with no economic data this week, the pair will rely on the headlines surrounding the Aussie lockdowns.