AUD GBP Flat with Aussie Retail Sales Data Due

AUD GBP Flat with Aussie Retail Sales Data Due

The AUD GBP exchange rate was trading flat on Wednesday as the market awaits the latest retail sales data from Australia. Consumer confidence was higher this week as the country heads for a Black Monday splurge. In the UK, the Bank of England’s Governor continues to react to criticism over the failure to raise to rates in November with a threat to drop rate projections.

The AUD GBP exchange rate was trading around the 0.5400 level and that is key for the next move.

Bank of England governor threatens to scale back policy guidance

Bank of England Governor Andrew Bailey said yesterday that he might further scale back guidance on the bank’s policy and return to making decisions on a meeting-by-meeting basis.

Speaking to the House of Lords Economic Affairs Committee, Bailey said that he was not a fan of the type of ‘forward guidance’ deployed by his predecessor Mark Carney.

“We will keep under review what I would call the boundary between giving the kind of signal that we gave three weeks ago – which essentially said ‘here’s our view of the world … this is what follows from it’.

“There is an alternative view, which is we should go meeting by meeting and not give any guidance. That is not off the table by any means. That is very well trodden ground by the MPC and I could imagine us going back to it.”

Financial markets interpreted remarks by Bailey in October as a signal that rates would rise in November. That saw a rally in the pound sterling, followed by a dump, when the bank did not raise rates. Bailey was then heckled by the financial markets and press as an ‘unreliable boyfriend,’ a joke which was first used with Carney, but Bailey did not see the lighter side.

Aussie consumers upbeat ahead of black Monday sales

Australian consumer confidence improved ahead of the latest retail sales data.

Markets are expecting a 2.5% reading from Thursday’s data, up from 1.3%. The ANZ-Roy Morgan consumer confidence index was higher by 1.3% this week, recovering half of last week’s decline.

Confidence was much higher in Victoria with a 4.9% gain after the state removed government lockdown restrictions.

Concerns surrounding the inflation outlook also eased back, despite petrol prices hovering close to record highs.

The survey’s inflation indicator dropped 0.4% and there were hopes that it could signal a larger trend.

“This indicator can be volatile from week-to-week, so we are cautious about overreacting to one survey reading,” ANZ head of economics David Plank said.

ANZ economists also expect Black Friday to set another spending record.

“Black Friday spending last year was actually 50% higher than the year before,” ANZ senior economist Adelaide Timbrell said.

“We’re not expecting another 50 per cent increase but we do have the perfect storm of no-one having travelled overseas this year, lots of household savings to draw upon and a resilient labour market.”

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