The AUD GBP exchange rate was still trading above 0.5300 on Wednesday with Westpac consumer confidence ahead for the Aussie economy. Another confidence reading in the country was at a nine-month low on Monday as the current lockdowns continue to demolish the Australian economic rebound.
The AUD to GBP pair trades at 0.5305 ahead of the latest UK GDP update tomorrow.
Aussie consumers at a nine-month low in confidence
Two reports released this week showed confidence in the Australian economy is slumping with multiple lockdowns across the country. The ANZ-Roy Morgan consumer confidence index took a hit, dropping 3.1% to 98.6, which is a level not seen since November last year with Victoria’s lockdown.
There was also a steep decline in business conditions, adding to expectations that the economy will contract in the latest quarter.
“With people across Queensland, Victoria and New South Wales in lockdown, this is having an impact on economic activity, this is having an impact on business and consumer confidence,” Treasurer Josh Frydenberg told parliament yesterday.
“We know that the Australian economy has underlying strength, and we know that it will bounce back from these challenges that it faces today. That is because it has done it before.”
The National Australia Bank’s business confidence survey tumbled 19 points to minus eight in July, marking the second largest fall since the previous financial crisis.
“NSW declined by a very large 27 points on the back of ongoing uncertainty about how quickly the outbreak could be contained,” the NAB chief economist said.
“That said, confidence was softer everywhere with uncertainty over the spread of the virus in the other states and border closures.”
The Westpac consumer confidence figure is released today and will likely mirror the slump in other bank indices. The figure has fallen steadily from a peak in April but could plummet this time around.
UK virus fatalities could stall the sterling rally
The UK Department of Health and Social Care (DHSC) said that 75% of adults in the UK have now received both doses of the vaccine and 89% have had one.
Prime Minister Boris Johnson described the news as “a huge national achievement which we should all be proud of”.
“Our incredible vaccine rollout has now provided vital protection against the virus to three-quarters of all UK adults. This is a huge national achievement, which we should all be proud of,” Johnson said.
But Johnson’s statement masks the latest news that virus-linked fatalities are at the highest level since March. The UK reported over 25,000 virus cases and 138 deaths within 28 days of a positive test.
The pound sterling has been soaring lately as the UK economy reopened fully and a rise in cases could stall that rally. The UK sees a GDP update for the second quarter on Thursday and that should define the path of the pound for the near-term.