(Updated 17:00 21/01/22)
The Pound Australian Dollar (GBP/AUD) exchange rate has fallen close to its opening position after showing a slight boost earlier in the day.
At the time of writing the GBP/AUD exchange rate is at around $1.8837, virtually unchanged from this morning’s opening figures.
Pound Australian Dollar (GBP/AUD) Exchange Rate Rises amid Poor UK Retail Data
The Pound Australian Dollar (GBP/AUD) exchange rate has climbed slightly despite pressure on the currency pair. The Pound (GBP) has likely been buoyed by expectations of rate hikes by the Bank of England (BoE) despite poor retail sales figures for December.
At time of writing the GBP/AUD exchange rate is around $1.8688, which is up roughly 0.2% from this morning’s figures.
Pound (GBP) Drops as Consumers Limit December Shopping
The Pound (GBP) has largely fallen against its competitors today following a worse than expected fall in December’s retail sales. The currency has made some gains against its riskier rivals however amid a risk-off market mood.
The UK’s December retail sales figures fell by -3.7% versus forecasts of -0.6%. The dip is largely thought to have been largely driven by the emergence of the Omicron variant, as consumers stayed away from retail stores. Whilst analysts are expecting a sales rebound between January and March, they were quick to highlight how the UK’s cost of living squeeze could severely hamper consumer demand.
Bethany Beckett of Capital Economics had the following analysis of the day’s data release:
‘That said, with the UK’s cost of living crisis looming, we expect a weakening in the consumer recovery to dampen retail sales further ahead. For the Bank of England, though, it’s about high inflation not weak activity. So we still think that interest rates will be raised to 0.50% in early February.’
The Pound is also likely to continue to face headwinds today as confidence in Prime Minister Boris Johnson continues to waver. Recent allegations of blackmail by multiple Tory MPs have shaken the party as it struggles to recover from multiple reports of illegal gatherings at 10 Downing Street.
Australian Dollar (AUD) Dips as Western Australia Delays Reopening
The Australian Dollar (AUD) has fallen against its competitors today amid a risk-averse market mood as well as surging Omicron cases in Western Australia.
The mining state has cancelled plans to reopen its borders this week amid a surge in Covid-19 cases, with 86 deaths recorded on Friday representing Western Australia’s deadliest day since the start of the pandemic. Premier Mark McGowan stated that the reopening would be delayed until triple doses of Covid-19 vaccinations reached 80%.
Further debt woes for the Chinese property sector may also have caused the ‘Aussie’ to falter today, as the Evergrande Group announced that it would hiring further financial advisors in order to aid with its severe levels of debt. Rising iron ore prices could cap losses for AUD however as Chinese demand for the commodity recovers.
GBP/AUD Forecast: Will PMIs Push Both Currencies Down?
Looking ahead to the rest of the week, a speech by Bank of England board member Catherine Mann could see the Pound rise should investors pick up on any hawkish comments. Next week will see January’s flash PMIs for the UK on Monday, with a forecast rise likely to boost Sterling.
Australia will see Flash PMIs for January released on Sunday with forecasts currently predicting a fall across all sectors. Should this data print as forecast then the Australian Dollar could dip.