Pound Australian Dollar (GBP/AUD) exchange rate strengthens as UK retail sales improve
The Pound Australian Dollar (GBP/AUD) exchange rate is rising today, following news that the UK’s retail sector is recovering.
At the time of writing, GBP/AUD is trading at around AU$1.9376, an increase of just under 0.4% from the morning’s opening rates.
Pound (GBP) supported by upbeat retail data
The Pound (GBP) is rising against most major peers today, following an upbeat slate of retail sales data.
The Confederation of British Industry (CBI) found that the UK’s recent sales slump had eased in February. Compared to January’s -50% drop, only -7% of retailers reported a fall in sales as opposed to an increase.
However, despite the optimistic news, the outlook isn’t fully uplifting. While it shows signs that the economy is managing to escape recession, sales are expected to continue falling in the near term.
Martin Sartorius, the CBI’s Principal Economist, commented:
‘The slump in retail activity eased in February following an exceedingly dreary start to the year. Nevertheless, with sales expected to continue falling next month, retailers are still planning to reduce headcount and investment going forward.’
Elsewhere, a mixed market mood may be serving to limit the Pound’s gains. As an increasingly risk-sensitive currency, increasing geopolitical tensions in the Middle East could be restricting it somewhat.
Australian Dollar (AUD) softens amid lack of data
The Australian Dollar (AUD) is struggling to attract much support today, owing to a lack of impactful data releases.
Because of this, markets appear to be sidelining the ‘Aussie’ in favour of other currencies. Additionally, increased geopolitical tensions between Taiwan and China may be further harming the Australian Dollar.
Over the weekend, Chinese rhetoric towards Taiwan has heightened, as the government increases pressure on the country. This could be weighing on the market mood as the risk of conflict notches up.
Elsewhere, the ‘Aussie’ may be being underpinned by rising iron ore prices. At the time of writing, prices are increasing by roughly 0.8% from the morning’s opening levels. As one of Australia’s key exports, this may be cushioning AUD agains steeper losses.
Pound Australian Dollar exchange rate forecast: BoE speech in focus
Looking ahead for the Pound, the core catalyst of movement is likely to be a speech from Bank of England policymaker Catherine Mann.
Mann is scheduled to speak on Wednesday and is likely to skew hawkish in her remarks. If she successfully advocates for tighter monetary policy, Sterling could strengthen.
For the Australian Dollar, meanwhile, the latest monthly inflation indicator is due on Wednesday. February’s reading is forecast to have increased to 3.5%, which may boost the ‘Aussie’ against its peers.
The Reserve Bank of Australia (RBA) has yet to rule out further tightening, an increase in inflation could prompt bets on hawkish action.
Elsewhere, risk appetite is like to play a role in shaping the pairing. As a more risk-sensitive currency, bullish trade could lift AUD above Sterling.