Pound Australian Dollar Exchange Rate Firms amid Better-than-Expected Retail Sales
The Pound Australian Dollar (GBP/AUD) exchange rate is strengthening this morning as UK retail sales rose unexpectedly.
At time of writing the GBP/AUD exchange rate is trading around $1.7500, a 0.42% surge from this morning’s opening levels.
Pound (GBP) Buoyed by Strong Retail Sales
The Pound is enjoying moderate success against many of its peers today as retail sales surprised to the upside and increased 0.5% in January. Rebounding from a 1.2% drop in December, retail sales beat market forecasts of a 0.3% decline.
The Office for National Statistics (ONS) reported that consumers continued to spend despite the cost-of-living crisis, with retail sales volumes rising by 0.5% in January. However, food shopping saw a fall of 0.5% as prices continued to soar, forcing many to cut back. And when compared to pre-pandemic levels, retail sales are still 1.4% behind. Darren Morgan, ONS Director of Economic Statistics commented:
‘After December’s steep fall, retail sales picked up slightly in January, although the general trend remains one of decline.’
Meanwhile, further boosting Sterling is news that Prime Minister Rishi Sunak arrived in Belfast to potentially sign the Northern Ireland protocol deal. The negotiation could finally signal a solution between the UK and the EU, avoiding a potential trade war between the estranged parties. A spokesperson for Number 10 Downing Street said:
‘Whilst talks with the EU are ongoing, ministers continue to engage with relevant stakeholders to ensure any solution fixes the practical problems on the ground, meets our overarching objectives and safeguards Northern Ireland’s place in the UK’s internal market.’
Australian Dollar (AUD) Unmoved by Hawkish RBA
Meanwhile, the Australian Dollar (AUD) failed to find strength in Reserve Bank of Australia (RBA) Governor Philip Lowe’s latest speech.
In the second day of the RBA’s testimonial to the economics committee, Lowe reiterated the central bank’s plans to continue raising interest rates. Citing a tight labour market, Lowe believes a steady path is key to bring inflation back down. Lowe added:
‘(If) you are doing it consistently over a number of meetings, that keeps public attention on monetary policy and the seriousness of the task that we have.
‘The world is uncertain, and when it is uncertain, it is better to move consistently and predictably rather than in steps.’
Despite maintaining a hawkish rhetoric, AUD investors seem to be unphased, and the risk-sensitive ‘Aussie’ remains under pressure.
Pound Australian Dollar Forecast: Brexit Deal to Lift the Pound?
Looking ahead, the Pound Australian Dollar exchange rate could see further movement if any further news of the Northern Ireland protocol deal is to be signed. After four months of fierce negotiations, an amicable resolution could quell fears of a damaging trade war between the EU and the UK.
Elsewhere, the Australian Dollar will continue to trade on market sentiment heading into the weekend amid a lack of data. PMI figures for February on Monday could influence the ‘Aussie’, as well as meeting minutes from the RBA policy meeting released on Tuesday.