Pound Australian Dollar Exchange Rate News: GBP/AUD Firmed amid as UK Retail Sales Continue to Strengthen

April 11, 2023 - Written by John Cameron

STORY LINK Pound Australian Dollar Exchange Rate News: GBP/AUD Firmed amid as UK Retail Sales Continue to Strengthen

Pound (GBP) Bolstered by Strengthening Retail Sector

The Pound (GBP) found renewed strength against most of its peers on Tuesday morning in the wake of stronger-than-expected retail sales figures. The British Retail Consortium (BRC) published the latest retail sales monitor data, showing that sales climbed by 4.9% YoY compared to March of last year.

The improvement matched February’s increase and surpassed market expectations as Mother’s Day purchases boosted sales despite the cost-of-living crisis. Helen Dickinson, Chief Executive at BRC, said of the latest data:

‘While the wettest March in over forty years dampened sales growth for fashion, gardening and DIY products, Mother's Day brightened up sales for the month.’

Elsewhere, the International Monetary Fund (IMF) has said that it expects interest rates in the UK will fall back to pre-pandemic levels once inflation has been tamed.

Australian Dollar (AUD) Supported by Improving Consumer and Business Confidence

Meanwhile, the Australian Dollar (AUD) came under increased selling pressure despite a significant improvement in both business and consumer confidence soared.

Westpac’s consumer confidence survey reached the highest levels since June 2022, as the figures printed at 9.4% against an expected 0.8%. The Reserve Bank of Australia’s (RBA) decision to pause the interest rate was key to this resurgence in confidence. Elsewhere, the National Australia Bank’s (NAB) Business Conditions survey also surprised to the upside, as business confidence climbed 3 points to -1 in March. NAB Chief Economist Alan Oster commented on the survey:

‘Confidence appears to have stabilized, but it remains below average at -1 index point. Confidence was particularly poor in retail and wholesale, likely reflecting that firms are concerned about how much longer consumer spending will hold up.’

Lending some modest support to the ‘Aussie’ is a potential end to the trade dispute between Australia and China. At the height of diplomatic tensions between the two nations in 2020, tariffs on barley exports from Australia severely capped prices for Australia. The easing of tensions could see the ‘Aussie’ climb on renewed optimism in other areas of tariffs and trade disputes. Australian Trade Minister Don Farrell, said:

‘We hope that this will be template for then moving on to the other areas of dispute, in particular in respect of Australian wine, which is also subject to very high tariffs.’

GBP/AUD Exchange Rate Forecast: BoE Speeches to Bolster Sterling?

Looking ahead, the Pound Australian Dollar exchange rate could see further movement with two speeches from BoE Governor Andrew Bailey on Wednesday. If hawkish rhetoric is carried through from last week, the Pound could climb on increased interest rate hike bets.

Meanwhile, a speech from RBA Deputy Governor Michele Bullock could impact the Australia Dollar. Any clues towards the central bank’s monetary policy could see the ‘Aussie’ climb or dip, the latter could happen if the RBA hints at keeping the interest rate held.

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