The AUDGBP exchange rate was 0.20% higher on Monday after the release of the latest RBA meeting minutes. The British pound has also been hit by surging virus variant cases and that has taken the wind out of sterling’s sail.
The AUD to GBP pair trades at 0.5380 with Australian retail sales due out tomorrow.
RBA still sees rate hike delayed until 2024
“The bank’s central scenario for the economy is that condition for rate hikes will not be met before 2024,” the Reserve Bank of Australia July meeting minutes revealed on Tuesday.
The Board said they remained committed to maintaining “highly supportive monetary conditions”.
The RBA also noted that the recovery in the labor market had been faster than expected but that could stall with the extended lockdowns in Sydney and Melbourne.
The central bank said they will not increase the cash rate until they see that inflation is sustainably within the 2 to 3% target range.
Another attempt to push back rate increases was made by saying that rate hike conditions will require labour market to be tight enough to generate “materially higher” wages growth.
In the same release the bank said that pay packet pain will continue and that there were few signs of higher incomes beyond levels that have been stubborn for the past half-decade.
The recent surge in inflation in reopened economies has seen the Bank of Canada and also New Zealand adopt a more hawkish tone to their monetary policy, but the RBA is sticking to its guns.
Aussie retail sales figures set to disappoint
Australia will see the release of retail sales tomorrow, but the figure is set to be subdued with the ongoing lockdowns in Sydney and Melbourne.
The figure tomorrow is set to show a -0.5% drop for June after a 0.4% rise in May. The UK retail sales figure will be released on Friday and is expected to be up 9.6% for June as the country continues to reopen.
The owner of popular restaurant chain Rashays has become the latest prominent Australian to question the government’s cycle of coronavirus lockdowns and the pursuit of a Covid elimination strategy, arguing that governments have had 18 months to come up with a better plan.
Greater Sydney is seeing a fourth week of strict lockdown restrictions, while South Australia has brought in tough restrictions and Victoria is also locked down. The latest lockdowns have led to a slump in the Australian dollar which has been seeing fresh yearly lows against the pound sterling.
The restaurateur said: “Lockdown after lockdown is crippling business and has enormous effects on not just the mental health of the workers and mums and dads, but will deliver a knock-on negative effect for our children in the long term.”
The AUDGBP has found some respite from the recent bearishness and now trades at 0.5375 ahead of the retail sales figures.