Pound Australian Dollar (GBP/AUD) Exchange Rate Rallies on UK Retail Sales Boost
The Pound Australian Dollar (GBP/AUD) exchange rate is soaring this morning, following a surprise increase in UK retail sales.
At the time of writing, GBP/AUD is trading at around AU$1.8984, a rise of just under 0.7% from the morning’s opening rates.
Pound (GBP) Rallies on Surprise Retail Strength
The Pound (GBP) is rallying this morning, following a surprise recovery in UK retail sales over May. Economists had forecast a 0.2% decrease, whereas sales increased by 0.3%.
The figures are suggesting that, at least in the meantime, UK shoppers are weathering the continued cost-of-living squeeze.
Ruth Gregory, Deputy Chief UK Economist at Capital Economics, commented:
‘The figures were far better than we had expected. But our view is still that the growing drag on activity from higher interest rates will eventually tip the economy into recession, generating a 0.5% peak to trough fall in real consumer spending.’
However, these gains may have been tempered somewhat by a less-than-stellar showing from the latest PMI print.
Both services and manufacturing indexes showed cooldown in June, which could be leading to signs of economic trouble.
Australian Dollar (AUD) Slips amid Mixed PMI Flashes
Risk averse trade is stifling the Australian Dollar (AUD) this morning, alongside a mixed set of private sector indexes.
June’s PMIs printed this morning, and indicated a slowdown in the services sector which printed at 50.7. Manufacturing, meanwhile, remained in contractionary territory – printing at 48.6.
Furthermore, this appears to indicate that the Reserve Bank of Australia (RBA) may be able to enact a pause soon. Warren Hogan, Chief Economic Advisor at Judo Bank, explained:
‘The survey suggests that the RBA has time on their side and does not necessarily need to hike rates again in July. The slowdown taking place across the economy provides further evidence that the point at which the RBA can undertake a genuine pause in their tightening cycle is getting closer’
Elsewhere, the sour market mood is likely weighing on the ‘Aussie’ this morning, as investors seek safer investments.
GBP/AUD Exchange Rate Forecast: Lack of Data to Mollify Pairing?
Looking ahead to the start of next week for the Pound, the data calendar is seeming relatively light. Because of this, Sterling could be left vulnerable to market dynamics, as well as continued reaction to the BoE’s rate hike.
As an increasingly risk-sensitive currency, a decrease in risk appetite could weigh on GBP rates. However, as a safer investment than the Australian Dollar, this could see GBP/AUD strengthen.
Continued analysis of the UK’s economic outlook may further shape Sterling too. With the recent rate hike, investors appeared to have grown concerned over the stability of the economy. Any further downbeat analysis could weigh on Sterling.
For the Australian Dollar, the start of the week is similarly light. Because of this, market sentiment may shape ‘Aussie’ rates. If the mood improves, AUD could gather support.