GBP/AUD Exchange Rate Dented by Solid Australian Retail Release
The Pound to Australian Dollar (GBP/AUD) exchange rate is on the back foot this morning as investors respond to Australia’s latest retail sales figures.
At the time of writing the GBP/AUD exchange rate is trading at around AU$1.9448, down roughly 0.4% from this morning’s opening rate.
Australian Dollar (AUD) Buoyed as Panic Buying Turbo Charges Retail Sales
The Australian Dollar (AUD) is enjoying some broad gains this morning as AUD investors welcome some surprisingly upbeat domestic retail sales figures.
According to preliminary data published by the Australian Bureau of Statistics (ABS), sales growth rocketed up by 8.2% in March, the largest monthly rise on record.
Preliminary Retail turnover rises 8.2% in March https://t.co/c3QeMbg12B
— Australian Bureau of Statistics (@ABSStats) April 22, 2020
The surge was driven by a whopping 22.6% increase in supermarket turnover last month as fears over the coronavirus pandemic spurred significant panic buying for food and other essential goods.
This more than offset the slump in other parts of the retail sector as stores were forced to closed as part of the lockdown.
However, while March’s figures certainly impressed, analysts warn of a likely collapse in sales growth as panic buying fades.
Sarah Hunter, Chief Economist at BIS Oxford Economics, comments:
‘Looking ahead, the boost to supermarket spending is likely to subside, as households come to the end of stocking up spending.
‘Without this support retail turnover is expected to fall sharply in April; the drag from the collapse in discretionary spending will remain, and the impact of job losses, reduced hours and wage cuts will also begin to bite.’
Hunter forecasts the slump in spending will contribute to the Australian economy shrinking up to 12% in the second quarter.
Pound (GBP) Muted as UK Inflation Slows
At the same time, the Pound (GBP) has found only limited support this morning following the publication of the UK consumer price index.
The Office for National Statistics (ONS) reports inflation slowed from 1.7% to 1.5% last month as the coronavirus lockdown weakened demand for a range of goods.
While today’s figures are unlikely to bring much joy to GBP investors, analysts warn April’s figures are likely to tell a far gloomier story.
Richard Pearson, Director at Investment Platform, EQi, comments:
‘Inflation is key indicator for future economic growth and this morning’s figures, covering March, start to paint a picture of potential damage to come for the UK. But the worst is likely yet to come in next month’s numbers.’
GBP/AUD Exchange Rate Forecast: PMI’s to Reveal Extent of Coronavirus Slowdown
Looking ahead, we may see the Pound to Australian Dollar (GBP/AUD) exchange rate come under further pressure in the second half of the week with the publication of the UK’s latest PMI figures.
April’s preliminary figures are expected to show that economic activity in the UK’s private sector slumped to an all-time low, likely denting Sterling sentiment as it points to a sharp plunge in GDP in the second quarter.
In the meantime, the publication of Australia’s own PMI figures overnight are likely to give AUD investors some pause for thought as the flash figures are forecast to show Australia’s private sector also hit a brick wall this month.