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The Australian Dollar was an outperformer among major currencies in mid-week trade following an announced reopening of China's borders for in and outbound travelers, helping to drive GBP/AUD near one-month lows while potentially leaving Sterling at risk of further losses.

Australia's Dollar was outperformed by only its New Zealand counterpart on Wednesday as the pecking order of performance among currencies appeared to reflect Monday's announcement that China intends to abandon many of its restrictions on travelers to and from the country.

This has direct and indirect implications for all economies but especially for Australia and New Zealand, which are popular tourist destinations for Chinese people and also key trade partners for the Chinese economy.

"The positive impact of these easing measures should go beyond international travellers. The easing could also reduce the level of worries of Covid among the general public, and gradually they would not perceive Covid as a big threat" says Iris Pang, Greater China economist at ING.

"This should increase mobility within the country from the first quarter of 2023, and therefore consumption as well," Pang writes in a Monday note.

Above: Pound to Australian Dollar rate shown at hourly intervals alongside GBP/USD and AUD/USD.

While all economies could benefit from a return of Chinese travellers, Australia's resource-exporting economy could be among the greatest beneficiaries if gloomy economist forecasts and expectations for the U.S. and European economies prove to be well-founded.

This is because in addition to benefiting from travel-related activity, the Australian economy would also likely be a key supplier of any raw materials used for infrastructure investment if recessions in Europe and the U.S. impact demand for Chinese goods.

"Our house view is that the US and Europe could enter a mild recession in the first half of 2023. As such, there will be a fall in external demand, export-related activities, including manufacturing, should slow, which would derail the recovery of the Chinese economy," Pang says.

"We therefore expect that the Chinese government will increase fiscal strength to support the domestic economy by continuing construction of uncompleted home projects and plans for more transport, energy and technology infrastructure," she adds.

There is high uncertainty over the outlook for economies in the U.S. and Europe where inflation rates have reached almost generational highs in the last year or more and interest rates are now rising in order to catch up and bring price growth down.

Above: Pound to Australian Dollar rate shown at daily intervals alongside GBP/USD and AUD/USD. If you are looking to protect or boost your international payment budget you could consider securing today's rate for use in the future, or set an order for your ideal rate when it is achieved, more information can be found here.

The UK economy has seen one of the highest inflation rates this year and many forecasts including those from the Bank of England suggest that it will also see the sharpest and most protracted contraction among G7 economies over the coming year or more.

However, representatives of the retail industry suggested on Wednesday that festive holiday footfall in major urban shopping centres rose significantly when compared with that of 2021 in spite of widespread disruption of rail travel.

"Despite rail strikes and more expensive fuel costs, shoppers were back in force not only in the two strongest retail areas of the Southeast and London but across the country as a whole," says Humphrey Percy, Chairman of SGM Foreign Exchange, of this year's sales and shopping extravaganza.

"Despite the best efforts of the online commentators to pour cold water on this boost to retail sales, the fact is that in Northern Ireland footfall was 5 times that of the same period last year and in London more than 130%," Percy writes in a Wednesday market commentary.

While it remains to be seen if such momentum carries over into the new year, a carryover would be highly supportive of consumer spending and the UK's services-oriented economy in a manner that might imply upside risk for Bank of England forecasts and Bank Rate in the first half of next year.