The AUD GBP exchange rate was slightly higher on Monday, despite negative developments for the pound sterling. The threat of a two-week ‘circuit breaker’ lockdown looms, while there is uncertainty for the economy, and its Prime Minister, after the departure of the Brexit negotiator. The UK faces consumer data on Wednesday, but analysts will look ahead to the next damage caused by lockdowns and restrictions to the all-important services sector.
The AUD GBP exchange rate was trading at 0.5385 with Australia also seeing high virus cases, but ministers want to ‘live with it’.
UK consumer data unlikely to move the pair
The UK faces consumer confidence data tomorrow, but the threat of lockdowns has already hit shopper numbers.
The consumer confidence figures have been in negative and gloomy territory all year despite the reopening. The reading in January was -28 and rose to plateau at -7 in the summer. The number hovered near -15 recently but is likely to slump again.
Weekend shoppers on the high streets of Britain fell by 2.6% this weekend with virus fears taking hold. Shopper numbers plunged by 8.5% in London.
The outcome was better for smaller market towns, shopping centres and retail parks, with footfall up by 3.4%, 0.5% and 4.7% respectively.
However, separate figures from the trade body UKHospitality showed a -40% fall in weekend takings with real gloom setting in about the prospects for New Year’s Eve, with governments potentially implementing a 2-week circuit breaker lockdown.
“The growing nervousness of consumers meant that footfall increases dwindled with each day that passed,” said Springboard retail data director Diane Wehrle. “This provided a forewarning for subdued performance of bricks and mortar stores and destinations over the weekend, which … is exactly what occurred.”
Pantheon Macroeconomics have estimated the UK economy could shrink by 1% between November and January, but that would grow to a 2% contraction with the same controls as Spring, or a 6% slump with a full lockdown.
Australia seeking a ‘sensible’ virus approach, but restrictions loom
While the UK Prime Minister calls cabinet meetings to brief ministers with scientific data, Australia’s ministers are seeking to ‘live with the virus’.
Governments often have an inability to work learn from history and are simply replaying the strategy attempted by the UK back in the summer- which has failed.
Despite their bullishness, Prime Minister Scott Morrison has called an emergency meeting before Christmas. Aussies may soon need three shots of a vaccine to be fully-vaccinated and Chief Medical officer Paul Kelly has called for some restrictions.
Mr Kelly recommended ‘minimal to moderate restrictions’ should be brought in across all states and territories as infection rates rise.
‘Masks should be mandated in all indoor settings including retail, hospitality when not eating or drinking, and entertainment facilities,’ he said.
It is looking like a Merry Christmas and a gloomy new year for both the UK and Australian economies and the AUD v GBP could swing depending on the length and damage.