The AUD GBP exchange rate dipped on Tuesday as traders await the latest flash PMI reading for UK manufacturing and services. The pound has been under pressure ahead of the Bank of England’s rate meeting this week due to the surge in gas prices in Europe. That is also pushing up spot prices for LNG in Asia, which would benefit the Aussie dollar.
The AUD to GBP exchange rate is still trading above the 0.5300 level and the Bank of England will provide their latest interest rate ideas on Thursday.
UK public borrowing falls less than expected
Public sector net borrowing in the UK fell lower than expected on Tuesday to £20.5bn in August, £5.5bn less than in August 2020.
Government receipts in August 2021 were estimated to have been £61.2bn, £5.3bn more than in August 2020. The numbers were higher than analysts had forecast despite a drop in spending due to fewer furlough payments.
“We are determined to get our public finances back on track – that’s why we have set out the focussed and responsible steps we are taking to keep debt under control,” said UK chancellor Rishi Sunak.
New projections from the Organisation for Economic Co-operation and Development (OECD) also said that inflation will continue to rise over the next two years. The OECD expects price increases to be significantly higher in 2021 and in 2022 than it had previously forecast.
The government saw increased spending levels from inflation-linked bonds in the most recent data.
The pound sterling has been pressured by a crisis in gas prices but news that Norway is increasing supply on October 1st could help soothe the current supply problems. A fire at a key import station last week saw further price increases and fears of energy firms going bust.
Andrews shuts down construction in Melbourne for two weeks
Victoria State Premier Daniel Andrews has been criticised for causing ‘distress and chaos’ by shutting down construction for two weeks, putting 320,000 workers out of a job.
The Victorian government made the latest move saying that it was needed to stop the spread of coronavirus because too many workers are breaking restrictions.
Victorian Treasurer Tim Pallas admitted that protests by a minority of construction workers who demonstrated outside on Monday and Tuesday was a key factor, but it will likely inflame the situation further.
“There’s been a very serious set of behaviours including on our streets which, in itself, is a public health risk,” Pallas said.
But Federal Housing Minister Michael Sukkar said the move was unfair on the majority of law-abiding construction workers.
“Today, more than 320,000 Victorian workers in the building and construction industry – representing 9.3 per cent of all Victorian jobs – are seemingly being punished for the actions of a violent minority of CFMMEU protesters yesterday,” he said.
“Having suffered some of the longest lockdowns anywhere in the world, the last thing Victorians need at this time is more distress and chaos”
The move is another blow for the Aussie dollar which has been reeling from harsh lockdowns.