The AUD GBP exchange rate was lower on Monday as traders stepped back from the recent gains in the Aussie dollar. The pair had rallied last week from the previous weeks’ slump as pound profit-taking met hopes for an end to Aussie lockdowns. Rising cases meant that Melbourne’s lockdown was extended and the near-term is still damaging for the country. The UK sees no high-level data this week and the pair will look to Wednesday’s GDP release for Australia.
The AUD to GBP trades at 0.5300 and the GDP release will show how the economy fared ahead of the latest lockdowns.
Sydney cases continue to rise
New South Wales set another national record yesterday with 1290 daily cases of COVID-19. There were also four deaths linked to the virus, while more than 800 patients also having the coronavirus are in NSW hospitals.
Victoria is set to see its lockdown extended on Thursday and Chief Health Officer Brett Sutton is unsure if Victoria can achieve zero COVID-19 cases in the short term, despite Premier Daniel Andrews stating that the state was still aiming for “very low numbers”.
“We have to do what is feasible,” Professor Sutton said on Monday after the state reported 73 new coronavirus cases. Melbourne will now enter the 26th day of its sixth lockdown, but that is going to be extended in the short-term.
Around 58% of Australians have a had a vaccine shot, with 35% fully vaccinated. The government wants that to double before any reopening occurs.
Australian GDP probably slowed ahead of delta deflation
Australia’s economy was possibly slowing before the wide-scale coronavirus restrictions shuttered business and jobs.
There is also a chance that the economy is already in a recession if Wednesday’s data on gross domestic product matches the weakest market forecast. The median call is for growth of 0.5% in the June quarter, but forecasts range from a 0.1% fall to growth of 1.2%.
That would be a further drop from 1.8% in the March quarter and a strong 3.2% in the last quarter of 2020.
“For most of the June quarter the Australian economy was travelling well, but then the Delta variant arrived,” said CBA’s economist Gareth Aird.
“For all intents and purposes, the Australian economy is currently in a manufactured recession as we go through another huge negative shock.”
With a fresh round of lockdowns enforced on Sydney, Melbourne and Canberra the economy is set to shrink again in the latest round of data.
“While a flat to negative Q2 GDP print is a real risk, this is far in the rear vision mirror as far as the economy is concerned given the sharp contraction expected in Q3 which we have pencilled in at around -3% q/q,” said NAB chief economist Alan Oster.
The AUD to GBP rate has recovered from the recent yearly slump as investors show caution to further gains in the pound but a low end figure for Aussie growth could spur the pound once more.