GBP/AUD is declining in early trading on Monday after the British government extended the lockdown measures for three more weeks to fight the COVID-19. Currently, one British pound buys 1.9626 Australian dollars, down 0.26% as of 6:45 AM UTC.
Last week, the UK government decided to extend the lockdown period, even though it has devastating effects on the economy. Yesterday, Cabinet Office minister Michael Gove told media that the government was not thinking about lifting the restrictive measures given the increase in the death toll. So far, over 16,000 people died from the new coronavirus, while the number of cases exceeds 120,000.
Gove said in an interview with Sky News:
“The facts and the advice are clear at the moment that we should not be thinking of lifting these restrictions yet.”
“The evidence suggests that the rate of infection and the death rate is flattening, but we’re not absolutely certain that we are yet on a downward trajectory,” he added.
UK Retail Activity Collapses
While the lockdown measures might have helped Britain to curb the spread of the virus, they have a severe impact on economic activity. Earlier Monday, the British Retail Consortium (BRC) stated that the number of Britons going shopping dropped by 83% since the government closed non-essential retail businesses.
Elsewhere, online real estate portal operator Rightmove said that it couldn’t provide house price data due to the decline in the number of new homes for sale being listed on the site.
Last week, the Office for Budget Responsibility (OBR) warned that the UK economy could collapse by an unprecedented 35% in the three months to June if the lockdown continued for the whole period. UK finance minister Rishi Sunak admitted that he was deeply troubled by the figures.
The Aussie has strengthened against the pound even though China – Australia’s largest trade partner – cut its benchmark interest rate on Monday. The move was widely expected, as Beijing is stimulating the economy to recover from the coronavirus crisis.
The one-year loan prime rate (LPR) was cut by 20 basis points (bps) from 4.05% to 3.85%. The five-year LPR was reduced by 10 bps to 4.65% from 4.75%.
