Pound to Australian Dollar (GBP/AUD) Exchange Rate Losses Seen on UK Retail Sales Slowdown
The Pound (GBP) has fallen in value today, making a loss of -0.3% against the Australian Dollar (AUD).
In addition to supportive Australian data causing GBP/AUD exchange rate losses, the Pound has also been devalued by the latest UK retail sales stats.
Covering reported sales activity in September, these readings have shown a slowdown in annual sales when growth was expected, alongside a larger-than-expected drop in monthly sales.
Chalking the poor sales conditions up to Brexit-based uncertainty, Fidelity’s Emma-Lou Montgomery said:
‘ While some retailers may be pinning their hopes on the recent news that consumers are likely to see a boost to their pay packets after this week’s data revealed that our earnings growth is currently outstripping inflation, UK consumers are unlikely to be splashing out just yet given the current climate of uncertainty around the Brexit negotiations.
‘Unlike most common colds we are suffering at this time of year; UK households are still unable to shake off the prolonged symptoms of inflation and poor wage growth since the Brexit vote.’
Another cautious respondent was Hargreaves Lansdown Senior Economist Ben Brettell, who said:
‘It looks like consumer spending – along with the weather – peaked in early summer and has been declining ever since. Where we go from here is highly uncertain.’
Outside of this direct economic data, the Pound to Australian Dollar exchange rate has also been held back by concerns about the ongoing Brexit process.
Wednesday’s EU summit on Brexit failed to bring any real progress in negotiations and the suggestion that the transition period could be extended led to a polarised response.
Stressing the importance of making clear headway in the near-future, Confederation of British Industry (CBI) Director General Carolyn Fairbairn said:
‘Business’ patience was already threadbare and is nearing an end. The need for compromise on both sides to agree the [EU] Withdrawal Agreement and secure the transition period is long overdue.
‘The risk of no deal is already biting hard. With each week that passes, firms are accelerating their contingency planning, diverting investment and costing jobs.’
Australian Dollar to Pound (AUD/GBP) Exchange Rate Boosted by Historically Low Unemployment Rate
The Australian Dollar (AUD) has risen near to a monthly high against the Pound (GBP) today, thanks to highly supportive unemployment rate data.
The latest jump in the AUD/GBP exchange rate puts the pairing up to a level of AU$ 1.8374, the best level since early October.
In a pleasant surprise for AUD traders, the unemployment rate in September has been reported to have fallen from 5.3% to 5%, against estimates for no change or a rise to 5.4%.
This puts the Australian jobless rate at the lowest level since April 2012 and has been labelled by some as ‘full employment.’
Taking this highly positive news with a pinch of salt, APAC Economist at Indeed Australia Callum Pickering said:
‘It would be surprising if the unemployment rate didn’t bounce higher over the remainder of the year.
‘The monthly figures can be highly volatile and we shouldn’t overreact to such a strong unemployment figure.
‘The labour market has performed well recently, reducing labour market slack, but a 5% unemployment rate is still a little too good to be true.’
Another sceptical voice on the matter was Dr Shane Oliver of AMP Capital, who said:
‘The amount of slack in the Australian labour market is likely to remain in stark contrast to the US, where [there could be] significant acceleration in wage increases. In Australia this is still a fair way off.
‘Continued growth in total hours worked and the fall in the unemployment rate will benefit consumers through higher aggregate household income, as well as boosting consumer sentiment.
‘Whilst we expect wage pressures to pick up gradually, the Australian consumer continues to face considerable headwinds due to the ongoing housing market correction and a savings rate that is already extremely low.’
Pound Sterling to Australian Dollar Exchange Rate Forecast: Are GBP/AUD Gains ahead on Carney Speech?
This week’s last major economic event will be a Bank of England (BoE) speech on Friday; BoE Governor Mark Carney is due to make remarks in New York.
For Pound traders, Mr Carney could boost GBP demand if he hints at a 2019 interest rate hike.
The next major Australian economic data is a long way off, so the Australian Dollar could next be influenced US Dollar movement.
If the US Dollar appreciates on Friday because of high hopes for a near-term interest rate hike then the Australian Dollar could fall in value due to lower risk sentiment.
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