The GBP AUD exchange rate was flat on Monday as traders expect further data. Traders will watch the Australian inflation rate on Wednesday, which could move the pound sterling versus the Australian dollar. Analysts at ING said that the Reserve Bank of Australia might have to ‘go large’ on interest rate hikes due to inflation and tight employment levels.
The GBP to AUD rate opened the week at the 1.7340 level, trading at 1.7338 in Monday’s session.
Anthony Albanese rules out fossil fuel mining ban
Australian Prime Minister Anthony Albanese denied Labour would support a ban on fossil fuel projects because it would have a “devastating impact on the Australian economy”.
Ahead of new legislation on Wednesday that will confirm Labour’s 2030 and 2050 emissions reduction targets, the prime minister said a moratorium was the Greens’ policy, adding it was not in the government’s policy as it would have a severe impact on the country’s economy.
Australia’s economy relies heavily on fossil fuel exports, which helped support the country through the global economy’s financial crisis and pandemic woes.
If Australia were to stop exporting coal, there would be significant job and economic loss, as well as less taxation and revenue for education, health and other services. While the stopping of coal would not lead to a reduction in global emissions, there would likely be a replacement of coal from other countries, which will produce higher emissions due to the quality of the product.
UK economy should narrowly avoid a recession, EY ITEM says
The British economy is set to grow by 3.7% this year, and 1% in 2023, according to the EY ITEM Club.
That marks a downgrade from a previous prediction of 4.1% and 1.9%. The downward revision comes after higher inflation and an increased squeeze on household income.
However, the country will likely narrowly avoid a recession. It issued another disclaimer on energy price shocks and an aggressive Bank of England tightening monetary policy. Business investment fell from 10% in May to 6.4% – half the 12.8% growth expected in the EY group’s winter forecast.
While the outlook for the UK economy is significantly gloomier than in the spring, the forecast indicates there will be enough support to encourage growth for the remainder of the year, avoiding a recession, Hywel Ball said.
While the economic challenges are widespread, with consumers and businesses feeling the pressure, business investment persistently underperforms expectations. Investment continues to be significantly below pre-pandemic levels, despite a softening of restrictions and government incentives. Furthermore, subdued growth prospects, rising costs and debts, particularly among SMEs, mean a U-turn is not likely in the short run.
The other big news for the euro this week was the expectation that Russian gas would come back online after Russia’s maintenance.