The GBP AUD exchange rate was 0.07% higher after the latest figures for UK GDP showed a surprise increase in growth. Analysts expected a 0% monthly number, with the economy lurching towards a recession. A 0.5% gain for the month allayed those fears. Australia is now dealing with a winter surge of covid cases, which could see the dollar pressured if health officials urge further lockdowns.
The GBP to AUD rate trades at 1.7600. It is still not out of the woods against the Aussie dollar.
Pound sterling higher after a surprise UK GDP increase
The British pound was boosted by the latest growth figures, which showed a 0.4% gain in May and a 0.1% higher revision for April.
The annual figure for the UK economy increased to expectations of 3.5% for 2022. Services output saw growth of 0.4% in May, boosted by health and social work activities.
Output for consumer-facing services fell by -0.1%, with retail sales dropping by 0.5% on the month. The lower retail activity relates to the strong recovery in international travel, which likely saw the high street shunned for sunnier shores.
Construction was another 1.5% higher with a seventh-consecutive higher month. Production grew by 0.9%, with 1.4% coming from manufacturing.
The new government may boost Britain’s economy. The Chancellor pledged to drop the income tax rise, while other members in the race for the PM role said they will cut it to 15%.
Aussies urged to work from home as covid cases rise
Australia could be in line for millions of new Covid cases before the end of the winter season after new strains of Omicron BA4 hit the country.
Australia said it recorded 57 deaths related to the virus on Wednesday. Many of those cases were in people who had already had the virus, a sign that immunity is waning. Health Minister Mark Butler said on Tuesday that mask-wearing indoors and working from home was important for those with symptoms.
The latest talk of cases could pressure the Australian dollar as China also moved to shut down its casinos in Macau. Australia could suffer from the strict Chinese lockdown efforts and may enact some of its own across the country.
The country saw negative numbers on Tuesday after retail sales dropped by 1% in June. Helen Dickinson, chief executive of the British Retail Consortium (BRC), said: “Sales volumes are falling to a rate not seen since the depths of the pandemic, as inflation continues to bite, and households cut back spending.”
“Discretionary purchases were hit hard, especially white goods and homeware, while consumers traded to cheaper brands in food and non-food alike.”
Tomorrow brings the release of consumer inflation expectations for the Australian economy. We will also get Australian employment figures. An increase of 30k jobs is expected, lower than last month’s 60k. However, unemployment will likely drop to 3.8% as job numbers remain at multi-decade highs.
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