The AUD GBP exchange rate was -0.25% lower as Darwin and Katherine were the latest to join the lockdowns in Australia. Sydney’s own stay-at-home orders were extended state-wide on Monday and NSW, alongside Melbourne are engaged in lockdowns. Today will see the release of the latest RBA minutes and the UK employment figures.
The AUD to GBP pair trades at 0.5300 and could drop again towards the yearly lows.
Aussie dollar weak with continued lockdowns
The Australian dollar is still under pressure as the country sees continued lockdowns. Darwin and Katherine were the latest to join the stay-at-home orders and the ACT also extended its lockdown by a couple of weeks following a spike in cases, with 19 infections recorded today. Sydney extended its state-wide lockdown ahead of Monday.
Sydney saw its deadliest day of the pandemic on Monday, according to government figures. NSW state Premier Gladys Berejiklian said seven people in Sydney had died from Covid-19 in the past 24 hours.
Melbourne’s five million residents will now also see a nightly curfew and a two-week lockdown, Reuters reported. Victoria state Premier Daniel Andrews told the media that Melbourne will now remain in lockdown until 2nd September after seeing 22 infections.
“We are at a tipping point. There is simply no option today but to further strengthen this lockdown,” he said.
In contrast, the UK reported over 28,000 new Covid cases and 26, but the economy is fully open. The cost of the Aussie government’s strategy is weighing on the dollar and keeping a bid for the pound sterling.
RBA minutes and UK employment ahead
Today will see economic data in the form of the Australian RBA meeting minutes, alongside the UK’s latest employment figures.
The UK is expected to post an additional 75k jobs, up from 25k in the previous month as businesses get back to hiring, especially in the services sector. UK businesses are showing a positive ambition to hire new workers as the economy reopens. One headwind to that has been a shortage of workers as many don’t want to halt the furlough scheme, while others have been displaced by the virus lockdowns.
The Australian central bank will release minutes today and the central bank is expected to revise its economic forecasts soon if the current pandemic lockdowns extend into the fourth quarter. Analysts already expected a negative GDP in the third quarter and hoped for a fourth quarter rebound.
The RBA also believes that the current policy settings are sufficiently accommodative to boost the recovery, while further monetary easing would have a lag of up to six months. By that time, the RBA is expecting that Australia will be out of lockdown.
The AUD to GBP rate has yearly lows at 0.5272 and the data today could see another drop towards the lows if the UK can muster a stronger jobs number due to their current reopening strategy.