Pound Australian Dollar (GBP/AUD) Exchange Rate Tumbles as Australian Retail Sales Spike

GBP/AUD Exchange Rate Slips on Upbeat Australian Data

The Pound to Australian Dollar (GBP/AUD) exchange rate is on the defensive this morning, in response to an impressive retail sales print from Australia.

At the time of writing the GBP/AUD exchange rate is trading at around AU$1.8994, roughly 0.4% down from this morning’s opening rate.

Australian Dollar (AUD) Rallies on Impressive Retail Sales Figures

The Australian Dollar (AUD) is on a tear this morning, recouping a goodly portion of its recent losses on the back of some stronger-than-expected retail sales data.

According to data published by the Australian Bureau of Statistics (ABS) sales growth surged 0.9% in November, striking its best levels in over nine-months.

This was up from an upwardly revised 0.1% growth in October, and blew pass expectations for a modest 0.4% rise.

The spike in sales was attributed to the rising popularity of Black Friday, with consumers coaxed into spending more in order to take advantage of the discounts offered by retailers.

However analysts warn that Black Friday is likely to distort the underlying growth and could see a sharp decline in sales in December due to consumers bringing their Christmas shopping forward.

Matthew Hassan, as analyst at Westpac Bank, comments:

‘While we welcome the improvement and see evidence of a wider lift we are wary that much of the Nov gain may prove to be a temporary effect due to the rising popularity of ‘Black Friday’ sales that has sees a corresponding drag in months to come.’

Further buoying AUD exchange rates this morning is the renewed risk-on mood in markets, amidst easing tensions in the Middle East.

Pound (GBP) Muted as MP Pass Brexit Bill

At the same time, the Pound (GBP) is trading in a narrow range this morning after MPs in the House of Commons gave their final backing to Boris Johnson’s EU Withdrawal Bill yesterday.

The bill still faces the House of Lords, but so long as there are no amendments in the upper house then it should be ratified early next week.

While GBP investors will welcome the short-term clarity the bill will bring, Johnson’s reluctance to extend the transition period past December could limit any upside in the Pound given the clear risk of a no-deal Brexit at the end of 2020.

GBP/AUD Forecast: US and China to Sign Trade Agreement

Looking ahead to next week’s session, the main catalyst of movement in the Pound to Australian Dollar (GBP/AUD) exchange rate looks to be the highly anticipated signing of a ‘phase one’ trade deal between the US and China.

This could see the ‘Aussie’ trend higher through the session as the deal will be a major easing of trade tensions between the two powers and should prove positive for Australia’s trade driven economy.

Meanwhile, in the spotlight for GBP investors next week will be the publication of the UK’s consumer price index on Wednesday.

This could strengthen Sterling if the CPI figures show domestic inflation continued to strengthen last month as it might help take some of the pressure off the Bank of England (BoE) to pursue a near-term rate cut.

Matthew Andrews

Contact Matthew Andrews