AUD GBP Weak with UK Rates but Melbourne to Open

AUD GBP Higher after Inflation Data, Sunak Budget Ahead

The AUDGBP exchange rate closed the week with a 0.51% loss as the UK central bank looks set to increase interest rates as early as December. But Melbourne is finally set to end the world’s longest lockdown this week. Australia will have no high-level data reporting this week and the UK’s inflation update in the middle of the week could underscore the BoE plans further.

The AUD to GBP exchange rate starts the week below the 0.5400 level.

Melbourne holds lockdown record but looks to reopening

Melbourne is finally set to lift the world’s longest period of lockdown this week. State Premier Daniel Andrews announced the relaxation of curbs at the weekend. Officials are expecting that the state’s double-vaccination rate will reach 70% this week.

“Today is a great day. Today is a day when Victorians can be proud of what they have achieved,” Andrews said.

The statement said that hospitality would be reopening, and schools would be returning sooner than expected.

Melbourne’s five-million population will have seen six lockdowns totalling 262 days since March 2020. According to the Australian media, this is the world’s longest lockdown, surpassing the 234 days seen in Buenos Aires. The move will be the latest attempt by an Australian stat to “live with” the virus.

In a further statement on Twitter Andrews announced, “The next stop on the roadmap is 80% double dose, and at the moment we think this will happen in the first week of November. But to get there we need to keep getting vaccinated.”

Scientists warn of rising virus potential with reopening

It wouldn’t be a full reopening without some gloom from scientists and a report has said that if the Australian international border is reopened while virus variants are circulating, large and disruptive outbreaks will still be possible at 80% vaccinated, modelling in the Medical Journal of Australia will say on Monday.

The modelling, led by Dr Mark Hanly from the University of NSW, applied various assumptions to transmission, vaccine rollout, and speed of border reopening to see the impact on virus cases.

 

However, “the number of people hospitalised with severe Covid-19 was very low,” the authors wrote.

The UK would be a testing ground for Australia after a full reopening, and cases have risen to their highest level in three months in the UK. However, Australia may benefit from warmer summer weather.

The pound sterling found support from the recent talk of a December interest rate rise and the UK economy will see the release of the latest inflation rate this week. With the two most-populous states reopening, the Aussie dollar will have to stand on the economic data that follows. The UK has a large head start for inflation and growth, which should be the key factor for the pair in the months ahead.

The 0.5400 level is key for the Australian dollar to continue its recent advance but rate talk has seen resistance there.