GBP/AUD exchange rate climbs following disappointing Australian data
The pound Australian dollar (GBP/AUD) exchange rate has strengthened this morning following the publication of some lacklustre Australian data.
At the time of writing the GBP/AUD exchange rate is trading at $1.9411, up almost 0.4% from this morning’s opening rate.
Pound (GBP) wavers following UK GDP
The pound (GBP) is trading mixed this morning, rising by almost 0.5% against some of its more risk sensitive peers but muted elsewhere, after the UK released its finalised GDP figures.
The Office for National Statistics (ONS) confirmed that the UK economy contacted by 0.3% in the final quarter of 2023.
This followed a 0.1% contraction it the third quarter, confirming the UK slipped into a recession in the second half of last year.
The ONS cited declining services output, production and construction as some of the leading causes of the figure.
The data also highlighted that Q4’s figure marked the lowest annual change in 15 years, excluding the coronavirus period.
ONS explained:
‘Excluding the year 2020, which was affected by the coronavirus (COVID-19) pandemic, this is the weakest annual change in real GDP since the financial crisis in 2009.’
However, despite the underwhelming but expected GDP release, the Pound has managed to hold steady in the first half of today’s trading session.
Australian dollar (AUD) slumps as retail sales slow
The Australian dollar (AUD) is facing headwinds this morning following the release of some worse-than-expected domestic retail sales data.
The preliminary data showed that sales growth expanded by 0.3% in February, down from a 1.1% expansion in January, and missing forecasts sales would grow by 0.4%.
Adding to the pressure on AUD was a warning that February’s weaker-than-expected figures were also propped up by temporary factors.
Ben Dorber, head of retail statistics at the Australian Bureau of Statistics (ABS), comments:
‘Looking past the temporary and one-off impact of the Taylor Swift concerts, underlying growth in retail turnover was up only 0.1% in trend terms. After a period of higher volatility from November through to January, underlying spending has stagnated.’
The AUD selloff also appeared to accelerate into the European trading session amid a prevailing risk-off market mood.
GBP/AUD exchange rate forecast: RBA minutes to infuse volatility in the Australian dollar?
Looking ahead, the main driver of movement for the pound Australian dollar exchange rate following the easter period is likely to be the publication of the minutes from the Reserve Bank of Australia’s (RBA) latest policy meeting.
The minutes will be scrutinised by AUD investors for any signs the central bank could begin unwinding its monetary policy in the second half of the year.
Should the minutes reflect the RBA’s recent hawkish rhetoric, AUD exchange rates could firm, however, should the latest minutes imply a more dovish consensus, the ‘Aussie’ could slide against its peers.
Turning to the pound, this week’s theme of minimal data will continue following the festivities, as UK data releases will remain thin on the ground heading into next week.
As such, Sterling may struggle to find a clear trajectory, and could be left vulnerable to market volatility.