GBP/AUD Exchange Rate Rangebound as UK Retail Sales Disappoint
The Pound to Australian Dollar exchange rate held steady today, with the pairing currently fluctuating around AU$1.78.
Sterling held steady against the ‘Aussie’ today following the publication of the British Retail Consortium’s (BRC) Like-for-Like Retail Sales report. The figure revealed that January saw retail sales beat forecasts and rise by 7.1%.
However, GBP investors have remained cautious, as sales rose at their slowest pace since May last year.
Helen Dickinson, the BRC’s chief executive, commented:
‘January saw retail sales growth decline to its lowest level since May of last year. The current lockdown has hit non-essential retailers harder than in November, with the new variant hampering consumer confidence and leading customers to hold back on spending – especially on clothing and footwear.’
Meanwhile, UK markets are awaiting an announcement from Health Secretary Matt Hancock, who is expected to announce compulsory Covid-19 testing for arrivals during quarantine.
George Eustice, the UK Environment Secretary, said:
‘Introducing testing during that quarantine period is an additional way of keeping track of where people are, and monitoring the development of the virus, for those who have it, as they arrive.’
As a result, GBP investors are cautious as further limitations could further inhibit the UK’s economic recovery in the months ahead.
Nevertheless, with UK schools set to reopen in March, traders are becoming more optimistic that lockdown restrictions could ease in the coming months.
Australian Dollar Steady as Australian Business Confidence Rises
The Australian Dollar struggled today following Monday’s publication of the latest National Australia Bank’s Business Conditions for January, which fell below forecasts to 7.
Today also was the publication of the latest Australian Business Confidence, however, which beat forecasts and rose to 10 in January.
Analysts at Reuters said:
‘A measure of Australian business confidence picked up in January while conditions eased back from historic highs as coronavirus breakouts curbed activity in a few cities but were ultimately contained.’
Investors are also becoming more hopeful that worldwide Covid-19 vaccine rollouts could improve the global economic situation in the coming months.
Forecast: Could Sterling Rise as the UK’s Covid-19 Rollout Appears on Schedule?
Australian Dollar traders will be awaiting tomorrow’s publication of January’s Australian New Homes Sales data. Any improvement in the outlook for home sales so early in 2021 would be AUD-positive.
Meanwhile, the AUD/GBP exchange rate will continue to be driven by global risk sentiment. If Covid-19 vaccines continue to promise a recovery in the months ahead, then demand for the risk sensitive ‘Aussie’ would benefit.
Pound traders will be looking ahead to tomorrow’s speech from Andrew Bailey, the Governor of the Bank of England (BoE).
If Mr Bailey is downbeat about the outlook for the British economy, then the GBP/AUD exchange rate would suffer.
However, Pound investors will be monitoring the UK’s Covid-19 situation. If the Covid-19 rollout appears to be on target for mid-February, then Sterling would head higher.