Pound Australian Dollar (GBP/AUD) Exchange Rate Stumbles as Australian Retail Sales Beat Forecasts
(Article updated 8:40, 28/3/23) The Pound Australian Dollar (GBP/AUD) exchange rate is falling this morning. Between an upbeat market mood and forecast-beating retail sales, the ‘Aussie’ is climbing against most peers.
While retail sales did slow down during February, the result printed a hair higher than expected at 0.2%. Because of the apparent resilience, AUD is climbing. Furthermore, risk-on trade continued across the Asian session.
At the time of writing, GBP/AUD is trading at around AU$1.8426, a decline of roughly 0.2% from the morning’s opening rates.
Original article continues below:
Pound Australian Dollar (GBP/AUD) Exchange Rate Climbs Higher amid UK Retail Optimism
(Article updated 16:48, 27/3/23) The Pound Australian Dollar exchange rate continued to climb over this afternoon, following the release of this morning’s distributive trades data.
The Confederation of British Industries (CBI) released March’s readings, which pointed to a renewed sense of optimism in the sector.
Martin Sartorius, the CBI’s Principal Economist, commented:
‘It’s encouraging that activity in the retail sector showed signs of stabilising after a challenging winter. This resilience has helped inspire some spring shoots of optimism, with firms expecting an increase in sales for the first time since last September.’
As such, GBP is climbing against most of its peers during the afternoon’s session. Similarly, an upbeat market mood may be adding an extra tailwind, due to GBP’s increasingly risk-sensitive nature.
At the time of writing, GBP/AUD is trading around AU$1.8493, a rise of around 0.5% from the morning’s opening rates.
Original article continues below:
Pound Australian Dollar (GBP/AUD) Exchange Rate Edges Higher as Further BoE Hike Expected
The Pound Australian Dollar (GBP/AUD) exchange rate is strengthening this morning, as economists begin to expect another 25bps interest rate hike from the Bank of England (BoE).
At the time of writing, GBP/AUD is trading at around AU$1.8440, a rise of roughly 0.2% from the morning’s opening rates.
Pound (GBP) Firms as Economists Expect Further Rate Hike
The Pound (GBP) is firming this morning, as investors continue to adjust their expectations of further interest rate hikes.
Today, Barclays has raised it’s forecast for the Bank of England’s terminal rate to 4.5%. As such, they believe another 25bps hike is on the cards.
As such, the increase in rate hike bets may be bringing modest support to Sterling this morning. However, the expectations of a pause and rate cuts are likely capping these gains.
Marian Cena, Barclays Economist, stated:
‘By mid-next year the (monetary policy) committee should be attuned to the risks of inflation falling well below target at the relevant policy horizon if the policy stance is left unchanged. Hence, we expect policy rates to turn more accommodative.’
Elsewhere, a gentle sense of optimism across the markets could be serving to further underpin Sterling. Due to GBP’s increasingly risk-sensitive nature, optimistic trade sparked by reduced banking sector anxieties may be benefitting the currency.
Australian Dollar (AUD) Undermined by Cratering Chinese Industrial Profits
The Australian Dollar (AUD) is struggling for support this morning, following the news that China’s industrial profits have slumped.
As a Chinese proxy-currency, the ‘Aussie’ is being undermined by the figures which showed a 22.9% contraction. Furthermore, a 4% drop in profits over 2022 in China is adding further headwinds.
Demand remains dwindled in the country, as the effects of Covid continue to weigh on Chinese consumers.
Eric Zhu, of Bloomberg Economics, commented:
‘Clearly, the reopening lift to activity hasn’t yet done much for the bottom line. It will take more time for demand and confidence to strengthen.’
However, the ‘Aussie’ is likely being underpinned by upbeat trade across markets. Market jitters over further banking collapses appear to be easing as we move into the European session. Because of this, the risk-sensitive Australian Dollar is able to avoid losses.
GBP/AUD Exchange Rate Forecast: BoE Governor Bailey Speech to Boost GBP?
Looking ahead for the Pound, the main driver of movement may be a speech from Bank of England Governor Andrew Bailey. If he takes a hawkish stance on inflation and provides clear forward guidance, GBP could rally.
However, with data releases relatively thin on the ground, GBP is likely to be left vulnerable to external factors. If the market mood sours, Sterling’s increasingly risk-sensitive nature could weigh it down.
For the Australian Dollar, February’s retail sales data is due to print overnight. If this reflects a slowdown, as forecast, AUD could weaken.
Elsewhere, market sentiment is likely to shape the pairing. If the market mood remains upbeat, GBP/AUD could weaken.