Pound Australian dollar exchange rate subdued as UK retail activity rebounds
The pound Australian dollar (GBP/AUD) exchange rate is trading without a clear direction this morning following a better-than-forecast set of UK retail data and a gloomy market sentiment.
At the time of writing the GBP/AUD exchange rate is trading at around AU$1.9033, virtually unchanged from this morning’s opening rate.
Australian dollar (AUD) stymied by disappointing PMIs
The Australian dollar is trading without a clear direction this morning following the release of the latest preliminary Australian PMIs overnight.
Activity in Australia’s manufacturing sector reportedly slowed in June, with the latest preliminary PMI slipping to 47.5, rather than 49 in June. Similarly, the services sector also retreated unexpectedly this month, with the index decreasing to a five-month low of 51 in June, rather than rising to 53.
Warren Hogan, Chief Economic Advisor at Judo Bank, said:
‘The composite input price index fell below the 60 level for the first time since January 2021, a sign that business cost growth might be easing. Hopefully, we are seeing the start of a genuine moderation in business cost growth. This is essential to reducing inflation in an economy with very little productivity growth over recent years.
Service sector price indicators pulled back in June, consistent with the view that inflation is gradually easing in 2024.’
Meanwhile, gloomy trading conditions further limit the acutely risk-sensitive AUD’s movement.
Pound (GBP) wobbles despite strong retail data
The pound (GBP) is struggling to attract investor support following some mixed UK releases.
GBP sentiment initially leapt this morning following the UK’s latest retail data. Retail sales across Britain unexpectedly rose by 2.9% throughout May, from an upwardly revised 1.8% decline in the previous month. With improved clothing, footwear and furniture sales leading the increase, consumer activity hit a four-month high last month amid UK improving weather.
In addition to this the UK’s latest preliminary manufacturing PMI leapt to a twenty-three month high of 51.4 this month, marginally rising from the previous month’s 51.2.
However, a worse-than-forecast services PMIs then served to cap Sterling’s gains, with the index reaching a seven-month low at 51.2 in June and missing forecasts of 53.
Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, commented:
‘Flash PMI survey data for June signal a slowing in the pace of economic growth, indicating that GDP is now growing at a sluggish quarterly rate of just over 0.1%.
The slowdown in part reflects uncertainty around the business environment in the lead up to the general election, with many firms seeing a hiatus in decision making pending clarity on various policies.’
In addition to this, a cautious market mood limited the increasingly risk-sensitive currency against its rivals,
Pound Australian dollar exchange rate forecast: risk appetite to drive volatility?
With no further releases due in the UK or Australia as the week draws to a close, the pound Australian dollar exchange rate may find itself vulnerable to global risk dynamics, with any upbeat trading conditions likely to underpin the highly risky ‘Aussie’ against its rivals.
Elsewhere, thin trading conditions could serve to cap any notable movement in the currency pairing.