GBP/AUD Steady, UK Retail Sales Data Not Enough to Boost Sterling

GBP/AUD Exchange Rate Flat Despite Strong UK Retail Sales

UPDATE: The Pound to Australian Dollar (GBP/AUD) exchange rate was left to trade in a narrow range this afternoon, with the pairing stuck around AU$1.8170 after Sterling gave back its tentative gains from earlier in the session.

Meanwhile the Australian Dollar also struggled to find momentum this afternoon as a resurgent US Dollar data helped to limit the appeal of the risk-sensitive ‘Aussie’.

Expect to see trade in the GBP/AUD exchange remain thin on Friday as UK markets close for the long Easter weekend.

GBP/AUD Exchange Rate Steady as UK Retail Sales Impress

The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate has stabilised this morning as markets welcome a surprisingly strong UK retail sales reading.

At the time of writing the GBP/AUD exchange rate is trading at around AU$1.8194, mostly unchanged from the day’s opening rate but up from a low of AU$1.8113 struck earlier.

Pound (GBP) Strengthened by Surging UK Retail Sales

The Pound (GBP) is edging higher against the Australian Dollar (AUD) this morning as the pairing recoups its initial losses following the UK’s latest retail sales figures.

According to data published by the Office for National Statistics (ONS), UK retail sales growth rocketed up from 0.6% to 1.1% in March, easily beating forecasts that sales growth would have contracted by -0.3%.

Despite heightened Brexit uncertainty it appeared UK consumer remained willing to part with their cash last month, with the ONS suggesting that the mild spring weather may have helped to boost spending.

However some observers suggest that this uptick in spending could also be attributed to Brexit stockpiling, which could result in the lift being temporary now that the deadline has been extended by another six months.

Australian Dollar (AUD) Muted Following Mixed Jobs Report

Meanwhile the Australian Dollar (AUD) is finding only limited support this morning following a mixed jobs report.

The Australian Bureau of Statistics (ABS) reported that domestic employment expanded by a solid 25,700 last month rising from an upwardly revised 10,800 in February and flying past forecasts of a more modest rise of 12,000.

However while employment growth proved solid, the report also revealed that unemployment also rose in March, climbing from 4.9% back up to 5% due to increased participation.

Further limiting the appeal of the Australian Dollar were also indicators that wage growth may have remained sluggish throughout March.

Analysts warn that while today’s report will not be enough to force the Reserve Bank of Australia’s (RBA) hand when it comes to rate cuts just yet, it could be on the cards in the future unless there is a more notable improvement in unemployment.

GBP/AUD Exchange Rate Forecast: ‘Aussie’ to Stumble as Slowing Inflation Increases RBA Rate Cut Fears

Looking ahead, the Pound Australian Dollar (GBP/AUD) exchange rate may strengthen during next week’s session as Australia publishes its latest inflation figures.

This is expected to see the ‘Aussie’ slide as economists widely predict inflation will have softened again in the first quarter, slipping from 1.8% to a two-year low of 1.5%.

Such a drop in inflation is likely to pile on the pressure for the RBA to cut interest rates this year, after it previously singled out weak inflation as being a potential trigger for adopting a more cautious approach to monetary policy this year.

Meanwhile, barring any major Brexit developments, the main catalyst for the Pound next week may be the Confederation of British Industry’s (CBI) Distributive Trades Index, which could dent the appeal of Sterling if UK retail activity is shown to have contracted again in April.

Matthew Andrews

Contact Matthew Andrews