Pound Sterling Australian Dollar Exchange Rate News: GBP/AUD Muted as UK Retail Sales Contract

GBP/AUD Exchange Rate Slips on Weak UK Retail Data

The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate is on the defensive this morning, following the release of some gloomy retail sales figures from the UK.

At the time of writing the GBP/AUD exchange rate is edging down this morning, with the pairing easing away from the two-week high struck on Thursday evening, and is currently trading at AU$1.8001 on the inter-bank market.

Pound (GBP) Dented by Contraction in Retail Sales

According to data published by the Office for National Statistics (ONS), domestic retail sales contracted by 0.9% last month, plummeting from a downwardly revised 1.3% growth in November.

This was slightly below forecasts of a 0.8% contraction and was the steepest decline in retail sales since May 2017.

The drop appeared to be further evidence of shifting shopping habits in the UK, with consumers now making the bulk of their Christmas purchases in November as they seek to take advantage of Black Friday sales.

Australian Dollar (AUD) Exchange Rates Mixed on Trade, Rate Speculation

At the same time the Australian Dollar (AUD) is seeking to push higher against the Pound (GBP) this morning on reports that the US may be planning to lift some of its tariffs against China.

The Wall Street Journal suggests that US Treasury Secretary Steven Mnuchin is considering the move in an effort to aid trade talks between the two countries.

Despite the White House subsequently denying that any decisions have been made, it appeared enough to buoy AUD and other risk sensitive currencies overnight.

However, capping the ‘Aussie’s’ gains this morning is mounting speculation that the Reserve Bank of Australia (RBA) may cut interest rates in 2019.

A growing number of economists are now forecasting that the downturn in Australia’s housing markets will force the RBA to respond later this year.

Marcel Thieliant and Ben Udy at Capital Economics are the latest to reveal their cards, as they suggest:

‘We think that 2019 will be the year in which previous excesses in Australia’s housing market will catch up with the economy.

‘We believe that the deepening housing downturn will become a far bigger drag on Australia’s GDP growth than most anticipate. Rather than hiking interest rates as most anticipate, we think the RBA will have to respond by cutting interest rates later this year.’

GBP/AUD Exchange Rate Forecast: Brexit Uncertainty to Continue to Drive Sterling?

Looking ahead to next week’s session, the Pound Australian Dollar (GBP/AUD) exchange rate is likely to remain highly sensitive to Brexit developments as Theresa May attempts to forge a ‘Plan B’ that will be accepted by MPs.

However, also in the spotlight for GBP investors will be the release of the UK’s latest employment figures, with Sterling potentially finding some support if wage growth remained robust in November.

Meanwhile, the release of China’s latest GDP figures may drag on AUD exchange rates at the start of next week, with an expected dip in growth likely to dent market risk appetite.

The publication of Australia’s labour report may also limit the appeal of the ‘Aussie’ at the tail end of next week, with employment growth forecast to have fallen in December.

Luke Trevail

Luke studied Journalism at university but quickly moved into the financial sector, initially working in retail banking before joining TorFX in 2007. As a Senior Account Manager Luke assists in overseeing the management of the company’s exposure to currency volatility. He uses his years of foreign exchange experience to produce regular news updates exploring the latest currency movements.

Contact Luke Trevail