Pound Australian dollar (GBP/AUD) exchange rate hits near one-month high overnight
The pound Australian dollar (GBP/AUD) exchange rate is edging higher this morning after approaching a new one-month high overnight.
At the time of writing the GBP/AUD exchange rate is trading at $1.9407, up roughly 0.2% from this morning’s opening rate.
Pound (GBP) holds steady despite underwhelming retail sales
The pound (GBP) is firming against the majority of its peers despite the release of underwhelming UK retail sales figures.
This morning, The Office for National Statistics (ONS) reported that UK retail sales stagnated in March, following an upwardly revised 0.1% reading the month prior, and missed market expectations that they would increase to 0.3%.
ONS Senior Statistician Heather Bovill commented:
‘Retail sales registered no growth in March. Hardware stores, furniture shops, petrol stations and clothing stores all reported a rise in sales. However, these gains were offset by falling food sales and in department stores where retailers say higher prices hit trading.’
The disappointing stalling of consumer spending at the end of the first quarter, may signal the UK’s post-recession rebound may not be as strong as previously hoped.
Despite the disappointing data reading, Sterling has managed to attract some modest support in the first half of today’s European trading session.
Australian dollar (AUD) undermined by risk-off flows
The Australian dollar (AUD) is on the back foot this morning as tensions in the Middle East continue to escalate causing markets to return to cautious trading conditions.
As reports of an airstrike from Israel onto Iran overnight circulate this morning, AUD exchange rates are faltering as investors opt for safer assets.
Stephen Innes, Managing Partner at SPI Asset Management, explains:
‘Reports of an Israeli aerial bombardment targeting a key nuclear facility in central Isfahan have sparked a significant shift out of risk assets and into safe-haven investments.’
However, the ‘Aussie’ has recovered from the lows struck overnight, after a senior Iranian official stated there is no plan for an immediate response.
GBP/AUD exchange rate forecast: Australian inflation to drive movement?
Looking ahead, the main catalyst of movement for the pound Australian dollar exchange rate next week will likely be Australia’s annual inflation reading for the first quarter of 2024.
The yearly figure is forecast to report that inflation decreased in Q1, and is expected to fall from 4.1% to 3.4% for this reading.
Should the data print as expected and confirm sticky inflation figures, this could buoy the ‘Aussie’ in mid-week trade.
Before that, Australia will also release its preliminary Judo manufacturing and services PMIs for April, scheduled for Tuesday. Will an expected mixed reading be enough to hobble AUD exchange rates before the inflation reading?
Turning to the pound, Tuesday will also see the release of the UK’s latest flash manufacturing and service PMIs for April.
Should the data report that UK private sector growth began to accelerate again this month it may lift GBP exchange rates in the early stages of next week.