GBP/AUD Exchange Rate Dips as Australian Retail Sales Rise in May
The Pound Australian Dollar exchange rate dipped this morning following the release of the latest Australian retail sales data for May, which edged up by a less-than-expected 0.1%. Analysts expect Australia’s economic recovery to remain strong, with private consumption, employment growth, and rising house prices and low mortgage rates to fuel the nation’s recovery over the coming months.
What’s Been Happening: Pound Rises as UK Economy is ‘on a Much Sounder Footing’
The Pound Australian Dollar exchange rate rose last week as US-China tensions weakened demand for the risk-sensitive ‘Aussie’.
Ed Mills, managing director at Raymond James, said that tensions between Beijing and Washington could worsen under the Joe Biden administration, with the two nations ‘going down a path of great confrontation’.
With China being Australia’s largest trading partner, this dampened confidence in the nation’s economic recovery.
Meanwhile, the Pound rose last week despite rising cases of Covid-19 sparking concerns of a possible third-wave later this year.
Instead, GBP investors focused on the positive, with UK joblessness falling in April by 4.7% and rising confidence in the nation’s hospitality sector.
Daily coronavirus deaths in the UK remained relatively low, while hospitalisations showed a steady increase.
Jeavon Lolay, the head of economics at Lloyds Bank, expressed optimism in the UK economy, saying it was is ‘now on a much sounder footing.’
Three Things to Watch Out for This Week
- Australia’s Commonwealth Bank PMIs
Tuesday will see the publication of the flash Australian Commonwealth Bank composite PMI for June. Any improvement in the outlook for the Australian economy would be AUD-positive.
- Bank of England’s Interest Rate Decision
GBP investors will be awaiting Thursday’s BoE interest rate decision. Although the bank is expected to hold rates at 0.1%, any bullish commentary about the outlook for the UK economy would strengthen the Pound.
- UK Consumer Confidence
Thursday will also see the latest UK consumer confidence gauge for June. If this shows some improvement thanks to the nation’s intensive vaccine programme and easing or lockdown restrictions, then we could see the Pound Australian Dollar exchange rate head higher.
Pound Australian Dollar Forecast
The GBP/AUD exchange rate could struggle this week if cases of Covid-19 continue to rise throughout England.