GBP/AUD Undermined as Poor Retail Sales Raise Concerns over the UK Economy
(Updated 14:30, 20/8/21) The Pound Australian Dollar (GBP/AUD) exchange rate is off its best levels this afternoon, with the GBP/AUD pairing slipping from back from the 14-year high struck earlier this morning.
This pullback comes amid broad pressure against the Pound in the wake of the UK’s abysmal retail sales release earlier this morning, which reported a surprise contraction of sales growth last month.
The underwhelming release has exacerbated concerns about potential job losses in the UK, which compounded with ongoing concerns over climbing coronavirus infections, is applying pressure to the GBP/AUD exchange rate this afternoon.
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Pound Australian Dollar (GBP/AUD) Exchange Rate Rallies amid Gloomy Mood
The Pound Australian Dollar (GBP/AUD) exchange rate is trading positively again this morning as a prevailing risk-off mood saps demand for the ‘Aussie’.
At the time of writing the GBP/AUD exchange rate is trading at around AU$1.9076, the pairing’s best levels since May 2020.
Australian Dollar (AUD) Stumbles in Bearish Trade
The Australian Dollar (AUD) continues to trade under significant pressure this morning as a souring market mood sees investors largely shun the risk-sensitive ‘Aussie’.
The deterioration comes as coronavirus cases in many parts of the world continue to rise, raising concerns over the trajectory of the global economic recovery.
The fact this comes at a time when the Federal Reserve is seeking to wind down its pandemic-era stimulus measures has spooked investors this week, and greatly hurt the appeal of the high-yield Australian Dollar.
Further undermining AUD exchange rates are concerns over Australia’s own coronavirus situation, as local cases continue to rise and the lockdown in Sydney has been extended until at least the end of September.
Pound (GBP) Gains Tempered by Abysmal Retail Sales Figures
At the same time, the Pound’s (GBP) gains against the Australian Dollar have been capped this morning by the release of some lacklustre UK retail sales figures.
According to data published by the Office for National Statistics (ONS), sales growth contracted 2.5% in July, slumping from a downwardly revised 0.2% expansion in June.
This fell well short of the 0.4% expansion forecast, and was the weakest sales growth since the start of the UK’s third lockdown in January, and a major disappointment given the easing of coronavirus restrictions in England last month.
Aled Patchett, head of retail and consumer goods at Lloyds Bank, commented:
‘With the UK’s recovery lagging behind that of other major economies, the return of holidays, social events including weddings and the general easing of restrictions last month hasn’t turbocharged consumer spending in the way many hoped it might have.’
Pound Australian Dollar Forecast: Underwhelming PMIs to Extend ‘Aussie’s Losses?
Looking ahead to the start of next week’s session, the Pound Australian Dollar exchange rate may extend its recent losses with the publication of Australia’s latest PMI figures.
August’s preliminary figures are expected to report that activity in Australia’s private sector continued to contract amid ongoing lockdown measures.
Coupled with the current bearish market bias, this could see the ‘Aussie’ face considerable headwinds on Monday.
Meanwhile, the publication of the UK’s own PMI figures could temper any upside potential in the Pound at the start of the week as economists forecast growth in the UK’s all important service sector will have cooled again this month, in spite of it been the first full month in over a year in which all coronavirus restrictions were lifted in England.