GBP/AUD Exchange Rate Falls as Australian Trade Surplus Swells on Iron Ore Sales
The Pound Australian Dollar (GBP/AUD) exchange rate fell today, leaving the pairing trading around AU$1.793 on the interbank market.
The Australian Dollar (AUD) edged higher against the Pound (GBP) following today’s publication of the Australian trade balance figures for Jun, which exceeded forecasts and rose from 6,173 million to 8,036 million.
These were boosted by increased iron ore shipments and the price of metal hitting five-year highs.
Andrew Hanlan, an Economist at Westpac, commented:
‘Export earnings have been boosted by higher commodity prices while import volumes are soft at a time of weak domestic demand and with the lower dollar making imports more expensive.’
Today also saw the Reserve Bank of Australia hold its interest rate at a record low of 1% after cuts in June and July.
Alex Joiner, an Economist at IMF Investors, said:
‘The RBA have stressed that further policy accommodation will be forthcoming ‘if needed’. This implies that it would like to assess the impact of its initial 50bp of cuts on the real economy and asset prices before moving again.’
The ‘Aussie’s gains are likely to be short-lived as US-China trade tensions are increasing following Beijing’s limiting of the Chinese Yuan which has been interpreted by the US administration as a direct retaliation against US tariffs on Chinese goods.
GBP/AUD Exchange Rate Sinks as UK Retail Sales Fall to Record Lows in July
The Pound failed to benefit from today’s publication of the BRC Like-For-Like Retail Sales figures for Joly, which rose from -1.6% to 0.1% a – its lowest in July since 1995.
Helen Dickinson, the Chief Executive at the British Retail Consortium (BRC), said:
‘While retailers will welcome the return to growth, it has nonetheless been a punishing few months for the industry. The combination of slow real wage growth and Brexit uncertainty has left consumer spending languishing with the 12-month average total sales falling to a new low of just 0.5%.’
Meanwhile, no-deal Brexit fears are increasing following comments from the former Environment Secretary Michael Gove, who said that the EU is refusing to negotiate a new withdrawal agreement.
Mr Gove said:
‘I am deeply saddened that the EU now seem to be refusing to negotiate with UK. The prime minister has been clear that he wants to negotiate a good deal with the European Union.’
Sterling traders have become increasingly jittery as now both the UK and the EU appear to be assuming a no-deal on October 31.
GBP/AUD Outlook: Brexit and Global Trade Tensions in Focus
‘Aussie’ traders will be awaiting the publication of the AiG Performance of Construction Index for July later on this evening.
Any signs of improvement could boost the AUD/GBP exchange rate.
Tomorrow will see the publication of the Australian Home Loans figures for June, which are expected to increase from 0% to 0.6%.
Meanwhile, Sterling traders will be looking ahead to tomorrow’s release of the UK Halifax House Prices figures for July, which are forecast to rise from -0.3% to 0.3%.
The GBP/AUD exchange rate will likely remain volatile this week with global trade uncertainties rising while the UK and the EU face a deadlock over Brexit.