AUD GBP Faces Big Week of UK Economic Data

AUD GBP Drops as Australian Business Activity Disappoints

The AUD GBP exchange rate was lower into the weekend despite weaker GDP from the UK. Tomorrow will see employment released for the UK, with core inflation on Wednesday. Those two numbers will set the pair up for Thursday’s BoE interest rate announcement.

The AUD GBP exchange rate was trading at 0.5400 as the week got underway.

What to expect from UK economic data and BoE

The Bank of England were hotly tipped to raise interest rates in December, but those hopes disappeared with the reaction to the virus variant.

Michael Saunders has been a more hawkish member of the bank’s MPC but last week he was taking a caution tone over the virus.

GDP figures also showed on Friday that they were slower into October. Tomorrow sees employment figures for the UK and they are expected to come in at 185k jobs added versus 247k previously.

The unemployment rate is still tipped to come in at 4.2% versus 4.3% last month. A better number would support the hopes for the BoE, while core inflation released on Wednesday could add further pressure. Analysts have forecast core inflation at 3.8% versus 3.4% previously.

Analysts are seeing Q1 22 as the more likely date with February being predicted by some.

The government is likely to vote through the latest virus restrictions and that should add a further headwind to the rate hike path.

Frydenberg calls for Australia calm over virus variant

Australia must loosen up its virus restrictions to bolster its economic recovery, Treasurer Josh Frydenberg said on Saturday.

“States need to keep calm and carry on. And not overreact to the Omicron variant,” Frydenberg said.

The treasurer also said state and territory leaders must loosen up restrictions aimed to slow the spread of the virus, stressing a need to support Australia’s economic growth while he downplayed fears about the variant.

 

“Our economic recovery depends upon it. We have the vaccination rates now at record highs and that has proven to be a vital defence against Covid.”

Australia has one of the highest vaccination rates in the world at over 90% but is seeing another rise in cases to over 1700. The country has already slowed plans to open up its international borders.

The UK is moving to vote through new restrictions on Tuesday with the opposition party stressing their support for the vote.

The UK economy was seen already slowing into October and there are fears that the new restrictions will damage the recovery. Businesses are also calling for support from Rishi Sunak with some even calling for a return to furlough schemes.

BoE policymaker Michael Saunders voted for a rate rise at the last meeting but has since said that wants to find out more about the variant.

The UK government is trying to enforce new restrictions at a time when they are under fire for flouting their own rules. Boris Johnson is facing a revolt from his own party over the new rules with around 70 set to vote against the Plan B curbs.

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