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Pound Australian Dollar (GBP/AUD) Exchange Rate Rises as UK Consumer Borrowing Soars as Economy Reopens

June 29, 2021 - Written by John Cameron

GBP/AUD Exchange Rate Edges Higher on Strong UK Consumer Borrowing and Rising House Prices

The Pound Australian Dollar (GBP/AUD) exchange rate rose by 0.3% today as UK consumers borrow again as the nation’s economy reopens. The pairing is currently fluctuating around AU$1.83.

Sterling rose today following a new report from the Bank of England (BoE) which revealed that consumers borrowed more as consumer credit than they paid in May. This is the first time this has happened since August 2020.

William Schomberg and Andy Bruce, analysts at Reuters, commented on the report:

‘Britain has reported one of the world’s highest COVID-19 death tolls and its economy shrank by almost 10% last year, but it is expected to outgrow even the United States in 2021, helped by a fast vaccination programme and huge stimulus from the government and the Bank of England.’

Today also saw Nationwide report that house prices had risen at their fast rate since 2004.

According to the Nationwide survey, the average price of a UK home had risen by 0.7% in June – its highest rate of growth since November 2004.

Robert Gardner, the Nationwide chief economist, explains:

‘June saw the third consecutive month-on-month rise, after taking account of seasonal effects. Prices in June were almost 5% higher than in March.’

With the UK economy expected to extend its recovery in July – thanks to the easing of lockdown measures on July 19 – Pound investors have become more optimistic about the outlook for the UK economy.

Australian Dollar (AUD) Exchange Rate Sinks as New Covid-19 Cases are Found Across Australia

The Australian Dollar (AUD) fell this weak after new outbreaks of Covid-19 were found across Australia in what has been described as a ‘new phase’ of the pandemic.

Australian Treasurer Josh Frydenberg commented:

‘I think we're entering a new phase of this pandemic, with the more contagious Delta strain.’

As a result, ‘Aussie’ investors have become increasingly cautious as the Delta strain of Covid-19 threatens to derail Australia’s economic recovery.

NSW Premier Gladys Berejiklian explains:

‘We have to be prepared for the numbers to bounce around and we have to be prepared for the numbers to go up considerably because with this strain, we are seeing almost 100% of transmission within households.’

In absence of any notable Australian economic data today, the ‘Aussie’ has edged lower due to risk-off market mood.

GBP/AUD Exchange Rate Forecast: Could an Upward Revision in the UK’s GDP Boost Sterling?

Australian Dollar (AUD) traders are looking ahead to tomorrow’s release of the latest Australian manufacturing PMI for June.

Any indications of a strong performance in one of Australia’s largest sectors would see the AUD/GBP exchange rate edge higher.

Risk sentiment will continue to influence the risk-averse ‘Aussie’ this week. If Covid-19 rates fall in key economies such as the US, Europe and China, then we could see demand for risky assets such as the Australian Dollar begin to pick-up.

Pound (GBP) investors will monitor tomorrow’s release of the latest GDP data for the first quarter. Could a surprise upward revision in the nation’s gross domestic product gauge further bolster Sterling’s gains?

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