The AUD GBP exchange rate was 0.19% higher on Monday, helping the Aussie dollar to hold the key 0.5400 level. The pound has been stronger against other currencies on expectations that the UK will raise rates as early as December, but sterling lagged on Monday with higher virus cases. Melbourne’s reopening this week means that the most-populous states of Victoria and Sydney are now back open for business.
The AUD to GBP exchange rate was trading at 0.5403 and was just holding above that resistance level.
Australia could loosen visa requirements for Brits
Australia could be set to relax its working holiday visa rules and allow older British citizens to stay longer in an attempt to combat labour shortages created by the lockdowns.
As part of a free trade agreement with the UK, the working holiday visa age would be raised from 30 to at least 35, while the length of stay would be extended from one year to at least three years.
Dan Tehan, the current trade and tourism minister, promised Canberra would be “willing to do more” than the current deal.
He said: “If we can’t have free exchange and movement of people between ourselves Australia and Britain, then who can we have it with?”
The post-Brexit free trade agreement is being finalised this week and is expected to make it easier for Britons and Australians to live and work in either country.
The latest moves come as Australia’s annual migration intake fell from around 160,000 before the pandemic to almost zero because of the international border closure. That has left the country with severe labour shortages and economists have warned these shortages will have a major impact on the nation’s economy over the short- to medium-term.
Bailey reiterates rate action, Rabobank sees risks
Bank of England Governor Andrew Bailey has said again that the central bank is ready to raise interest rates amid inflation risks.
During an online panel discussion at the weekend, Bailey said the BoE will “have to act” in its monetary policy meetings due to the risk of inflation.
Deutsche Bank analyst Jim Reid said that the central bank was to be using the weekends “to prime the markets for imminent rate hikes”.
However, analysts at Rabobank do not share the view that an interest rate rise is imminent, while they also flagged risks to the UK growth outlook.
“Fears around the medium-term outlook for the UK economy could hinder the prospects for the pound next year and beyond,” they said.
“Tensions with French fishermen and disagreements about the Northern Ireland protocol have brought warnings of a trade war between the UK and the EU. Neither had had a significant impact on the pound to date. That said, this is a risk that the differences between the UK and the EU won’t be resolved easily and, on the margin, this news-flow provides an additional disincentive to GBP investors.”
The Aussie dollar will now have to rely on the quality of economic data after the latest reopening.