Soaring UK Retail Sales Trigger GBP AUD Exchange Rate Rally

March 23, 2017 - Written by Minesh Chaudhari

STORY LINK Soaring UK Retail Sales Trigger GBP AUD Exchange Rate Rally

GBP AUD Exchange Rate Close to Monthly High on Rising Retail Sales

The Pound has risen considerably by 0.6% against the Australian Dollar today, following the news that UK retail sales rose above forecasts in February.

While economists have been quick to forecast that Q1 2017 sales may hit the biggest drop since Q4 2010, traders have paid little attention and bought into the Pound heavily.

On the other major UK news of late, Wednesday’s appalling terror attack caused a brief dip in Pound demand, but Sterling has recovered rapidly since then.

GBP Predicted to Drop on Next Week’s Brexit Trigger

The Pound is expected to fall heavily against the Australian Dollar on the coming Wednesday, when Prime Minister Theresa May is due to activate Article 50.

This will officially and bindingly put the UK on track to exit the UK and such a fact is likely to greatly weaken the Pound due to its finality.

In terms of UK economic data, the Pound could be in for further losses against the Australian Dollar next week.

A consumer confidence score on Thursday may remain negative, while on Friday, annual GDP growth in Q4 is forecast to drop from 2.2% to 2% which may extend any Article 50-induced Pound losses.

AUD Suffers Heavy Damage from Report Closely Linking AU-US Economies Together

The Australian Dollar’s value has been depleted today by a report that strongly ties Australia’s economic performance to its links with the US economy.

There has been talk lately of Australia building more trade links with China at the expense of the US, but these latest findings imply that such plans would lead to major Australian economic turmoil as it switched from one global superpower to another.

AUD GBP Exchange Rate Forecast to Improve if US Dollar Drops on Fed News

With no direct Australian data remaining this week, the Australian Dollar is next most likely to be moved by announcements from the US.

The most immediate US contribution will be a speech from Federal Reserve Chair Janet Yellen, who could push the US Dollar up or down depending on her tone.

For the Australian Dollar to appreciate and potentially rally against the Pound, Yellen will need to indicate that a US interest rate hike is not likely in May or June, the next two scheduled Fed meeting months.

Following these remarks, a string of speeches from Fed officials are expected over Thursday and Friday. If these also point to no near-term US interest rate rise then the Australian Dollar could end weekly trading in a strong position against the Pound.

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TAGS: Pound Australian Dollar Forecasts