The GBP AUD exchange rate was 0.05% higher on Thursday as the pound sterling looks for a catalyst to find further gains. Chancellor Rishi Sunak has announced a £15bn emergency package for households to help with living costs. That will come from £10bn of borrowing and a £5bn levy on oil & gas profits.
The GBP to AUD was trading at 1.7770 and needs to get above the 1.7800 resistance level or it may start another move lower. Unfortunately for sterling, it has been more bad news than good recently and upside may be limited.
UK households get some relief from cost-of-living pressures
Britain’s Chancellor Rishi Sunak has announced that UK households will receive help with their energy bills as part of a £15bn emergency package.
The Chancellor’s announcement comes after mounting pressure on the Johnson government to take action over the rising cost-of-living in the UK.
Inflation has been soaring and that has largely been driven by energy prices, which has led to a £5bn levy on oil & gas profits. The other £10bn will come from additional government borrowing.
Mr Sunak told MPs: “The high inflation we are experiencing now is causing acute distress to the people of this country.”
Opposition parties were less than grateful with Liberal Democrat leader Sir Ed Davey saying: “The Chancellor is hammering families with a £800 tax hike this year, more than wiping out what he announced today It is the Sunak scam, promising you help but picking your pockets while you’re not looking.”
Bank of England governor Andrew Bailey admitted feeling helpless in the face of rising inflation – the Chancellor added: “We can get inflation under control. It is not some abstract force outside our grasp. It may take time, but we have the tools we need and the resolve it will take to reduce inflation.”
Labor still awaits final seat confirmation for majority government
The Australian Labor party are still waiting for one more seat to confirm its majority government. The party are sitting on 75 seats with 49.7% of the vote and need just one to secure the majority.
The Australian dollar may get a boost on that confirmation ahead of the weekend or on Monday.
Bloomberg talked of hidden economic risks for new leader Anthony Albanese in the coming weeks. Albanese stood on a platform of criticism for the previous government’s role in inflation and may have to put his money where his mouth is as Rishi Sunak has done.
“While the A$2.2 trillion ($1.6 trillion) economy is now larger than pre-pandemic, has more people in work and consumer spending is solid, households and government also racked up heavy debts when borrowing costs were low,” Bloomberg said.
“Incoming Treasurer Jim Chalmers… “takes over a budget forecasting a combined A$224.7 billion in deficits over the next four years, providing little leeway for the spending Labor has promised”.
Next week will bring Australian GDP figures for the first quarter and the new government will hope for an early boost.
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