GBP/AUD Exchange Rate Surges on Impressive UK Retail Sales
The Pound Australian Dollar (GBP/AUD) exchange rate is roaring higher this morning as markets welcome the UK’s latest retail sales figures.
At the time of writing the GBP/AUD exchange rate is currently trading at around AU$1.9354, up roughly 0.6% from this morning’s opening rate.
Pound (GBP) Rallies on Upbeat Sales Data
The Pound (GBP) is punching higher against the Australian Dollar (AUD) this morning as markets cheer the release of the UK’s latest retail sales data.
The Office for National Statistics (ONS) reported domestic sales growth exploded by 0.9% in January, rocketing up from an upwardly revised -0.5% in December.
This was the first positive sales reading since July and beat expectations for a more modest increase of 0.7%.
The sharp rebound in sales growth appears to be a strong evidence of the ‘Boris bounce’ as uncertainty eased following the general election.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics comments:
‘January’s official retail sales figures confirm that the decisive general election has released the handbrake of political uncertainty on consumers’ spending. The headline number has been depressed by a huge 5.7% month-to-month drop in fuel store sales – the biggest since March 2015 – driven by a rise in fuel prices and bad weather.’
Consumer spending is a key source of growth in the UK economy, so January’s bumper reading will bolster hopes of a positive start to 2020 after domestic growth stagnated at the end of 2019.
However it wasn’t all sunshine and rainbows, with analysts warning the overall picture on retail sales remains relatively weak, with sales falling by 0.8% in the three months to January.
Australian Dollar (AUD) Tumbles as Disappointing Employment Data Increases RBA Rate Cut Odds
Meanwhile, the Australian Dollar (AUD) took a dive overnight in response to Australia’s latest jobs report.
According to data released by the Australian Bureau of Statistics (ABS), domestic unemployment shot up from 5.1% to 5.3% in January.
While employment growth beat expectations last month and a sharp increase in full-time positions was welcomed by markets, AUD investors were mostly focused on the headline unemployment reading.
The Reserve Bank of Australia (RBA) has repeatedly stated that tackling weakness in Australia’s labour market is a key priority for the bank, signalling that an easing of monetary policy would be possible if employment did not improve.
This is weighing heavily on the Australian Dollar this morning as markets begin pricing in a rate cut in April.