GBP AUD Weaker as Australia Reopens Borders

GBP AUD Weaker as Australia Reopens Borders

The GBP AUD exchange rate was weaker by -0.24% as Australia adds Korean visitors to its recent easing of border restrictions. Comments from Bank of England Governor Andrew Bailey also failed to clarify the rate position at the weekend.

The GBP to AUD trades at 1.18525 ahead of Australian PMI data.

Australia to welcome more visa holders in bid to boost economy

Australia is set to allow foreign visa holders to enter the country in December, Prime Minister Scott Morrison said on Monday, in the latest effort to support the economy.

Australia closed its international border in May of 2020 and allowed only restricted numbers of citizens and residents to enter. The rules were relaxed recently to allow foreign family of citizens to return. The Prime Minister said this will be scaled up from December 1st,

“The return of skilled workers and students to Australia is a major milestone in our pathway back,” Morrison told reporters. Australia will also allow vaccinated tourists from South Korea and Japan to visit in December.
The return of foreign students is a big deal for the Australian economy as they are worth around A$35 billion per year.

Around 235,000 foreigners, including about 160,000 students, had Australian visas at the end of October, according to government data.

Foreign students make up around 21% of enrolments at Aussie universities and their return will be a big boost to one of the hardest hit sectors.

ING sees confidence in UK economy but worried about virus

Bert Colijn of ING has said that concerns about new virus cases, and inflation worries, are affecting UK confidence:

“At face value, there is still a lot to like about the current economy. The labour market is fuelling income growth and should take away worries about spending as jobs are relatively plentiful.

Uncertainty for consumers seems to be stemming from two big issues. The rising cases of Covid and inflation. The first has the risk of causing further lockdowns and economic pain over the winter months. Quite some countries have already taken new restrictive measures and it looks like there’ll be more are to come in the coming weeks. This clearly has a dampening effect on the economic outlook and this casts a shadow on consumer confidence at the moment.

Inflation is another factor, especially as energy prices have been soaring, which is now being felt in households across the continent. That results in an income squeeze as real wage growth suffers on the back of this despite a strong labour market.”

Meanwhile, the Bank of England’s Governor has still not clarified the December interest rate picture. Huw Pill, Chief Economist at the BoE, said at the weekend: “I genuinely do not know today how I will vote.”

Bailey told the Sunday Times yesterday:

“Let’s be clear — if we see, particularly in terms of medium-term inflation expectations, that’s increasing, we’ll have to act. There’s no question. But to be clear, at no point did I, or anybody, say ‘by the way, we’re going to raise interest rates in November’”.

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