AUD to GBP Stronger After Diverging Retail Sales

AUD GBP Weakness Returns with UK Rate Talk

The AUD to GBP exchange rate is 0.35% on Friday after the UK and Australia both released retail sales figures. Both data sets missed expectations, but the UK saw a larger drop. Australia has also reported no new virus cases for over 48 hours.

AUDGBP is trading at 0.5576 as the pair struggles to get above the 0.5600 level.

Australians Still Indulging in Retail Therapy

Australian retail trade figures rose by 0.6% in January, which puts the figure at 10.7% per cent higher than a year ago. Annual sales have averaged 9.1% over the last six months as ultra-low interest rates and job gains boost consumer confidence. The closure of foreign borders and stimulus payments have also meant that spending is going into local businesses.

The UK picture was much more bleak after expectations of a -1.3% drop were met with a -5.9% drop due to the current lockdowns. The Bank of England has said last week that UK residents have around £125bn of “pent up” savings from the lockdowns and expect this to be released at some point into the economy.

Much of the savings are likely from the inability to get abroad and the mood in much of the country is a desire to get a break from the UK. Australia has benefited from shorter snap-lockdowns and a hot summer, while Brits are stuck at home in freezing temperatures.

The UK will see the release of PMI figures later this morning and the market expects services PMI to be at 41. The expansion signal is 50 so the economy is still struggling in the services sector. Manufacturing PMI is expected to dip to 53.2 and this is still in expansionary territory, but the sector is a smaller part of the UK economy.

UK Lockdown Path Will Drive AUDGBP with no Cases in Oz

The AUDGBP will be driven by the UK Prime Minister Boris Johnson’s “roadmap” out of lockdown on Monday. Johnson was accused of moving the goalposts as he talks of a “data, not dates” approach. The country has vaccinated 25% of its population and waiting for lagging indications of virus cases dropping would be absurd when the vulnerable age groups have received two vaccine doses.

The country’s Minister for Health Greg Hunt celebrated the result but said the worldwide case count supported a “broad-scale national vaccination programme”.

The AUD to GBP exchange rate has been on the decline in 2021 as sterling mounted a recovery. Traders are undecided about the 0.5600 level and the next path will largely depend on Boris Johnson’s announcement on Monday. Get in touch ahead of this announcement to discuss your upcoming currency exchange and how it’s likely to be impacted by these factors.