AUD GBP Struggles After Canberra Joins the Lockdowns

AUD GBP Higher but UK Employment Ahead

The AUD GBP exchange rate was lower on Thursday after Canberra was the latest city to join the hard lockdowns. The pound was also supported by GDP coming in at expectations, but the number fell short of the Bank of England forecast and the Aussie dollar versus pound pair had a small range on the day.

The AUD to GBP pair trades at 0.5310 and may have a quiet close to the week.

Canberra joins the great Australian lockdowns

Canberra has joined the country’s two largest cities with a seven-day lockdown after four cases of Covid-19 were detected in the territory, ACT confirmed.

Chief Minister Andrew Barr said the lockdown was required after a positive case in the community, as well as positive wastewater detections. Melbourne also used the wastewater excuse earlier in the week, which turned out to be false.

Later in the afternoon, the state’s chief health officer said there had been three more cases, saying:

“These were people who had prolonged and repeated exposure to our case”.

The lockdown in Canberra began at 5 pm on Thursday and with Sydney and Melbourne locking down recently, the majority of the country’s workforce has been idle.

“We have said throughout the outbreak in Greater Sydney that we would act quickly and decisively. We have seen that a short and immediate lockdown limits the potential spread of the virus, and is the best path to avoiding longer and more damaging lockdowns,” Mr. Barr said.

Sydney alone accounts for 25% of Australia’s output and 22% of its employment.

In the UK, virus cases rose again to over 30,000 and are up 8.6% on the week. The country also saw a warning from Imperial College that September could see more cases as temperatures drop and schools return.

UK GDP grows 4.8% but misses expectations of BoE

The UK GDP for the second quarter was 4.8% higher, according to the Office for National Statistics. Despite the strong return, the number fell short of the BoE’s expectations of 5%, which we warned could happen this week.  The economy is also still 4.4% below the pre-virus growth levels.

The British economy was boosted by strong consumer spending with the phased lifting of Covid measures in April and May. The largest contribution to output was from the accommodation and food services sector, surging by 87.8%, as consumers watched England progress through to the Euro 2020 final. Food and beverage services rose more than 10% as punters flocked pubs and restaurants with some summer weather.

Jonathan Athow, the statistician at the ONS, said: “The UK economy has continued to rebound strongly, with hospitality benefiting from the first full month of indoor dining.”

The AUD to GBP rate may now take a pause this week as traders await further data in the week ahead. The pound has been soaring of late but is now seeing a peak in growth, while virus cases are rising.