The GBP AUD exchange rate was higher on Monday as traders await the latest UK employment figures. They won’t get too excited about the result as the government gets set to vote on further restrictions, which will undoubtedly hit travel, retail, and the overall economy. Australia also has economic data with Westpac consumer confidence data.
The GBP AUD exchange rate was trading at 1.8530 ahead of the data.
Restrictions to hit GDP and jobs, says ING
Today sees the government voting on new virus restrictions and ING forecast a hit of 1-1.5%, but up to 5% with another lockdown.
“A February Bank of England rate hike looks likely, but it relies on Omicron dealing only a modest blow to UK activity.”
“If the government closed nightclubs, curtailed large events, imposed some new constraints on hospitality (eg outdoor-only dining), and extended school holidays by a couple of weeks, then we think January GDP would fall by roughly 1-1.5%. If a full lockdown is needed, then that probably delivers a 5% hit,” they added.
On the jobs market they said the “risk is that government support measures are less comprehensive”. But suggested that “the recovery in the jobs market stalls but fundamentally doesn’t deteriorate.”
Today sees the release of the latest jobs number with analysts expecting an increase of 228k. That would be down from the 247k print last month, but the jobs picture will deteriorate with the Omnicron panic.
British Airways, easyJet and Ryanair wrote an open letter to the government, saying that the Government restrictions were “haphazard” and “disproportionate”.
The three airlines said the new rules singled out the travel industry and would heap more pressure on their businesses.
Australia reopens its borders from Wednesday to select groups
Australia will go ahead with its plan to reopen its borders to some international visitors from Wednesday, according to the prime minister and health minister.
The country will allow international students, skilled workers and those with Working Holiday Maker visas (WHMs) from 15th December. The move was delayed by two weeks but will boost the Aussie dollar going forward.
After the border closures, Australia has lost out, with international students heading to Canada, the UK and the US in record numbers, new research by the Mitchell Institute at Victoria University showed. Australia and New Zealand experienced a dramatic drop in new international students, which is also likely due to the government’s aggressive covid strategies.
The UK had actually recovered the strongest with the number of new international students at record levels — 38 per cent higher than pre-virus.
The big event this will be Thursday, where the Bank of England will announce their latest interest rates. Analysts had expected the bank to raise rates in December, but the earliest possibility is now predicted for February 2022. Australia will see the release of the latest Westpac Consumer Confidence numbers with a jump expected from the lows which have been seen since August.
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