GBP AUD Looks for a Breakout from Recent Levels

GBP AUD Looks for a Breakout from Recent Levels

The GBP AUD exchange rate has been range trading recently with the 1.7800 level halting sterling gains and 1.7300 providing support. The day ahead will see GDP released for the UK economy and that could be a catalyst for a larger move. The latest figures are expected to show growth of 0.4% for the UK economy but the outlook for 2023 is poor.

The GBP to AUD rate was trading at 1.7466 ahead of the latest economic data.

British GDP figures will update traders on recession threat

The UK will see the release of GDP data for three months into the end of April and that will update traders on the spectre of inflation.

Growth is expected to be 0.4% for that period, which is a drop from the previous reading of 0.8% and a worse figure could see the economy inching towards a recession.

The OECD gave the UK a gloomy outlook last week with a warning that the UK would be the worst performing economy of the developed nations next year, except for Russia.

“The government should consider slowing fiscal consolidation to support growth,” the OECD said in its latest report.

The group also added that the government’s tax and spending plans would be “contractionary.”

“Monetary policy should continue to normalise gradually to help bring inflation to target. Fiscal policy has to balance gradual fiscal tightening with well-targeted support to protect vulnerable households from the rising cost of living,” the OECD said.

The OECD gave a grim outlook for the world economy, but the UK suffers from its dominant services economy making growth more volatile.

Boris Johnson commented on the OECD’s findings and seemed to think that the UK’s early end to the pandemic measures was the reason.

“Because we came out first, because of the steps that we took, we were slightly out of sync with much of the rest of the OECD.”

The UK economy got a head start against other nations on growth but there are deeper reasons for falling behind.

Unrest grows over effects of rising inflation on wages

EU airline staff have been putting the travel sector under pressure with strikes in the last week and there are similar strikes in Australia.

Thousands of prison officers, court staff and public sector workers in New South Wales walked out last week due to anger over the state government’s new wage cap.

The workers say that the 3 per cent cap is not enough with inflation growing at faster rates. This is the chickens coming home to roost for governments and central bankers after zero per cent interest rates masked bigger problems.

Public Sector Association General Secretary, Stuart Little said that politicians should not be setting wages.

“We hear about interest rates going up, prices going up, electricity going up, everything’s up except one thing: our wages. We are being asked to receive another pay cut this year,” Little said.

The situation echoes that in the UK where the governor of the central bank and also Boris Johnson appealed for workers not to ask for wage rises.

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