The AUD GBP exchange rate traded higher by 0.35% on Monday as the pair bucked a five-day losing streak. Traders have boosted the price of the Aussie dollar after the Prime Minister questioned the lockdown strategy at the weekend. The country is still seeing a surge in cases despite the harsh lockdowns across the country.
The AUD to GBP has little on the economic data front this week and will be driven by the news headlines.
Victoria virus cases expected to extend lockdown
A fourfold rise in “mystery” coronavirus cases in the last week and hundreds of infected children are seeing a reduced chance that the Victorian restrictions will be eased on schedule. Premier Daniel Andrews has also ruled out a NSW-style plan to vaccinate the state’s way out of the lockdown.
In the past seven days, almost 70 Victorians have been infected without knowing where they could have picked up the virus, which is a metric used by Australia. An Andrews government official said it was highly probable the lockdown would go on past September 2nd.
The Aussie dollar has been boosted by research and comments from the Prime Minister towards a British-style economic reopening with herd immunity.
The director of the Doherty Institute, which is modelling the national plan to reopen Australia, said reopening with large numbers of cases would still be safe once the country reaches the current target of 70-80% of the adult population vaccinated.
After days of debate between the state premiers, the Prime Minister and epidemiologists, Professor Sharon Lewin confirmed the number of cases did not materially alter the model. That will give traders some hope that the Australian dollar can benefit from a reopening before the end of the year with the onset of the Australian summer.
Record low fertility rates in Australia could cause ‘disaster’
ANU demographer Liz Allen is concerned that record low fertility rates in the country could be a future problem for Austrlia.
“A baby boom requires fertility rates to substantially exceed trend estimates. It’s very unlikely Australia will ever see a baby boom again, let alone now during a health and economic crisis like COVID-19,” Dr Allen said.
The country is not alone as other countries including the UK and US, Italy, Japan and South Korea are also said to be experiencing significant fertility decline.
“Australia’s birth rate continues to be below what is considered necessary for the population to replace itself,” Dr Allen added.
She says that action will be needed to slow the trend and if it doesn’t, “Australia’s economic future is in trouble”.
In Australia, with the long-term downward trend in fertility rates, the country saw a record low fertility rate of 1.66 babies per woman in 2019. A government report projects a drop to 1.59 in 2021.
If Australia’s fertility rate were to drop to 1.6 or 1.5 births per woman, “we’re in deep strife,” said Allen.