AUD GBP Moves Higher with Sydney Reopening

AUD GBP Extends Gains Despite UK Employment Gains

The AUD GBP exchange rate was 0.29% higher on Thursday as Sydney saw a long-awaited reopening. Sydney residents were celebrating on Monday as a near four-month-long lockdown affecting Australia’s most populous city was finally lifted.

The AUD to GBP exchange rate is trading at 0.5378 and will get UK employment data tomorrow.

Sydney lockdown lifted after a long 106 days

The Australian city of Sydney has finally reopened after 106 days of government-enforced lockdowns.

After a successful vaccination campaign, the government no longer wants to use the lockdown strategy. New South Wales, which has Sydney as its capital, recorded only 477 cases on Sunday, while more than 70% of the population over the age of 16 have now been fully vaccinated. Case numbers are still elevated in other parts of Australia, but Sydney has seen a downward trend in daily cases.

Restaurant owners and bars celebrated the news, while some chose to open their doors at 12:01 local time to serve vaccinated customers after months without business. Locals were also cheered at the end of the controversial zero-covid lockdowns.

“It’s a big day for our state,” said New South Wales’ conservative premier Dominic Perrottet.

Perrottet has only been in the job for a week after his predecessor Gladys Berejiklian resigned over corruption accusations.

Sydney and Melbourne host a large portion of the country’s workforce and both have struggled with strict lockdown measures.

Pound sterling supported by rate hike bets

Money markets have begun to factor in bets on a November interest rate increase after a relentless rise in yields last week. Bank of England policymakers also raised expectations of a first post-pandemic interest rate hike.

Interest rate futures traded on the Chicago Mercantile Exchange showed November contracts were pricing in a 20% probability of a rate hike next month, compared to 12% last week while December futures were pricing in a 45% probability of a rate hike.

BoE policymaker Michael Saunders told markets to get ready for “significantly earlier” interest rate increases as inflation pressure mounts in the British economy.

The pound sterling had been struggling with energy market issues after a surge in gas prices and fuel shortages, but traders are now focused on interest rates.

“I’m not in favour of using code words or stating our intentions in advance of the meeting too precisely. The decisions get taken at the proper time,” Saunders said.

“But markets have priced in over the last few months an earlier rise in Bank rate than previously and I think that’s appropriate.”

The bank’s Governor Andrew Bailey also weighed in over the weekend, saying that inflation is likely to head higher, and that the Bank faces a “very delicate and challenging job” with the economy in the longer -term.

The Aussie dollar is shrugging off the rate hike news as traders seek to rebalance the pair after the lockdowns. Tuesday will have further economic updates with UK employment figures.