Slow Pace of UK Sales Growth Triggers GBP/AUD Exchange Rate Slump
The Pound to Australian Dollar exchange rate (GBP/AUD) has fallen today, following the news that UK retailers struggled during January.
Retail sales growth during the month was a paltry, below-forecast 0.1%, while year-on-year sales only increased marginally.
Summing up the disappointing data, Keith Richardson of Lloyds Commercial Banking said:
‘Consumers were already tightening their belts at the end of 2017 by bringing most of their Christmas shopping forward to Black Friday to make the most of the sales.
Now it looks like they’ve started 2018 in cautious mood with subdued spending.’
Warnings of Brexit Recruitment Crisis Drag Pound to Australian Dollar Exchange Rate Down
Another factor weakening the GBP/AUD exchange rate has been a warning from British Chamber of Commerce (BCC) Director General Adam Marshall.
Marshall takes a critical look at the effects of Brexit on businesses in the UK, cautioning that:
‘As the Brexit process dominates politics, businesses are struggling to fill vacancies and to find the people they need in order to grow. In some sectors firms report that labour shortages have reached critical levels.
‘A combination of record employment levels for UK-born people, significant falls in immigration following the devaluation of Sterling in 2016, and the total absence of job candidates in some areas is biting hard.’
Marshall says the UK needs to maintain an open immigration policy during and after the Brexit process to ensure the avoidance of ‘unfinished urban buildings [and] fruit rotting in Herefordshire fields.’
Australian Dollar to Pound Rally Triggered by RBA Governor’s Reassurance
The Australian Dollar firmed against the Pound and most other peers today, thanks to reassuring statements from Reserve Bank of Australia’s (RBA) Philip Lowe.
Speaking in Sydney, Lowe spoke against cutting corporation tax in Australia and downplayed the damage that a credit ratings downgrade could cause.
On the latter subject, Lowe said:
‘I think a credit rating downgrade is more of a political event than an economic event.
It wouldn’t have any implications for monetary policy.’
Weekly Pound to Australian Dollar Exchange Rate Forecast: GBP Turbulence ahead on UK Jobs Data
The Pound could turn volatile against the Australian Dollar next week as UK earnings, claims and unemployment data will be released.
The readings, out on 21 February, have the potential to trigger GBP/AUD exchange rate movement, with the average earnings stats likely being the most scrutinised.
The pace of average earnings growth, with and without bonuses, is predicted to have remained static in December, at 2.5% and 2.4% respectively.
For context, UK inflation in January was recently reported at 3%.
If wage growth forecasts are accurate then the UK wage squeeze will persist, as the pace of inflation will remain above the rate of wage growth.
The Pound could fall if the wage squeeze remains unchanged next week, especially if wage growth slows unexpectedly.
UK GDP growth rate data will also be out on 22 February; year-on-year growth is tipped to be revised down, which could worsen GBP/AUD trading.
Australia will have a quieter week ahead, with the Australian Dollar only likely to be influenced by Reserve Bank of Australia (RBA) minutes and construction stats.
The RBA’s meeting minutes for February will be out on 20th February. Depending upon the tone of the minutes, the AUD/GBP exchange rate could fluctuate.