Pound Australian Dollar (GBP/AUD) Exchange Rate Firms as UK Retail Sales Beat Forecasts

Pound Australian Dollar (GBP/AUD) Exchange Rate Climbs on Upbeat Data

The Pound Australian Dollar (GBP/AUD) exchange rate is strengthening this morning, underpinned by a rise in UK retail sales.

At the time of writing the GBP/AUD exchange rate is trading at around AU$1.7777, which is up roughly 0.2% from this morning’s opening rate.

Pound (GBP) Firms on Stronger-than-Expected Retail Sales

The Pound (GBP) is finding modest support this morning as the UK’s latest retail sales figures came in better-than-expected.

Retail sales increased from -1.5% to 0.6% in October, against forecasts for a more modest 0.3% increase. Although sales are still weaker than pre-pandemic levels. According to the Office of National Statistics (ONS) increases were seem in every main sector except food sales, which fell 1% reflecting the current impact of the cost-of-living crisis.

Despite the lift in retail sales the state of the UK’s economic outlook appears to be limiting the Pound’s upside this morning. The combination of the cost-of-living crisis and wage stagnation continues to erode consumer spending power as inflation sits at 11.1%.

James Smith, Research Director at the Resolution Foundation spoke out about the economic outlook this morning saying Chancellor Jeremy Hunt’s mini budget yesterday will be tough to deal with.

‘[Hunt] has decided that households will do so with higher energy bills, higher taxes, and worse public services than previously expected. Whether or not making the choices was tough, the reality of living through the next few years will be.’

Australian Dollar (AUD) Capped by Geopolitical Tensions

The Australian Dollar (AUD) is trading in a narrow range this morning, as risk sentiment begins to cool.

A lack of significant data from both Australia and China is seeing the ‘Aussies’ potential being capped today. The lukewarm market sentiment has been triggered by fears that the war between Ukraine and Russia continues to escalate.

Russia has continued its attacks on Ukraine’s infrastructure. Missile strikes have left 10 million without power. It also appears that Russian forces are preparing a counter offensive in response to the Ukraine’s military retaking Kherson.

In a daily update the UK Ministry of Defence has said:

‘It is likely that Russia will attempt to eventually redeployed some of the forces recovered from Kherson to reinforce and expand its offensive operations.’

As the tensions in Europe continue to rise, it’s impacting global markets as investors worry about the impact continued war will have on trade and global growth. Unsurprisingly this is limiting the appeal of risk-sensitive currencies like the ‘Aussie’ this morning.


Pound Australian Dollar Exchange Rate Forecast: UK Data to Support GBP?

Looking ahead to next week, the Pound Australian Dollar exchange rate could be driven by UK public borrowing data on Tuesday.

According to forecasts, public sector net borrowing is expected to decrease from £19.25bn to £12.1bn in October. If the figures come in as expected, then the Pound could be lifted as the black hole in UK finances lessens somewhat.

Concerning AUD, the Reserve Bank of Australia Governor Philip Lowe is due to speak on Tuesday. If he strikes a dovish tone, in line with recent rhetoric, then the ‘Aussie’ could face headwinds.

Lauren Coulson

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