The Pound Australian Dollar (GBP/AUD) exchange rate has weakened this morning following the release of lacklustre economic data from the UK.
Towards the end of the week the GBP/AUD pairing were trending around the AU$1.8623 level as the broad weakness in Sterling pushes the Australian Dollar upward.
Pound (GBP) Falls on Lacklustre Economic Data from the UK
The Pound has fallen against the Australian Dollar this morning on the back of lacklustre economic data from the UK.
The release of the latest UK retail sales figures for June which has shown a rebound in consumer spending, however despite the rebound of 0.5% during June, economists were less than cheery about the figures.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, commented on the latest figures:
‘Retail sales probably will fall back over the coming months. The temporary boost to food spending from Euro 2020 will fade, while higher confidence does not appear to be translating to higher levels of economic activity, due to the recent rise in Covid-19 cases.’
The latest flash PMI figures from the UK also did little to support Sterling after they showed a sharp slowdown in the services sector, falling to a four-month low.
Chris Williamson, Chief Business Economist at IHS Markit, commented on the flash PMI’s, saying:
‘July saw the UK economy’s recent growth spurt stifled by the rising wave of virus infections, which subdued customer demand, disrupted supply chains and caused widespread staff shortages, and also cast a darkening shadow over the outlook.’
Australian Dollar (AUD) Supported Despite Downturn in Australian Flash PMI Figures
The Australian Dollar has found itself strengthening against the Pound for much of the morning as an upbeat market mood, alongside a weakening Pound bolstered the appeal of the ‘Aussie’.
The release of flash PMI figures from Australia surprisingly did not limit the appeal of AUD exchange rates despite a downturn in economic growth.
The Australian flash services fell to 44.2, a 14-month low as the coronavirus situation in Australia continues to worsen.
Jingyi Pan, Economics Associate Director at IHS Markit, commented on the sharp downturn in growth saying:
‘Latest indications from the IHS Markit Flash Australia Composite PMI suggested that Australia’s growth streak had been brought to a halt in July, and perhaps no surprise given the renewed lockdowns aimed to bring the COVID-19 situation under control.’
‘While demand and output had evidently been badly affected in July, they are expected to improve once the restrictions are once again lifted. That said, the current COVID-19 disruption’s effect on the supply chain remained evident.
GBP/AUD Exchange Rate Forecast: Australian Inflation Figures in Focus
Heading into next week, the latest inflation rate figures from the Australian Dollar are expected to come in at 0.6% during Q2, a fall in consumer prices could cause AUD exchange rates to fall at the start of the week.
A quieter economic week for the UK will see Pound investors instead keep an eye on any further domestic coronavirus developments as markets keep an eye on the ongoing supply-chain issues gripping the UK.