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Pound Australian Dollar (GBP/AUD) Exchange Rate Sinks Slightly Despite AU Retail Headwinds

September 28, 2021 - Written by John Cameron

Pound-to-Australian Dollar-rate-

GBP/AUD Exchange Rate Edges Lower on UK Fuel Crisis

The Pound (GBP) is trending down against the Australian Dollar (AUD) today, subdued by a mixed market mood. GBP is also pressured by UK fuel concerns, while AUD faces headwinds over Australian retail data.

At the time of writing, GBP/AUD is trading at A$1.8773, virtually unchanged from this morning’s opening levels.

Pound (GBP) Lowers on Fuel and Energy Concerns

The Pound is trading down against the majority of its peers today as ongoing UK fuel worries weigh upon Sterling sentiment. UK Prime Minister Boris Johnson has arranged for the army to deliver gasoline to petrol stations if needed, as a shortage of lorry drivers has already caused dry ups in several places.

The shortage comes as fewer EU nationals are delivering goods on Britain's roads as a result of Brexit restrictions. The government hopes that temporarily reversing policies by issuing short-term visas will alleviate pressures; although Edwin Atema, head of research and enforcement at the Federation of Dutch Trade Unions has dismissed the short-term fix:

‘The EU workers we speak to will not go to the UK for a short-term visa to help the UK out of the [mess] they created themselves.’

Further headwinds come from China, as growing global demand and a shortage in coal has resulted in power outages in the country’s northeast. Factories may fail to deliver goods on time, threatening to stall the global recovery from the pandemic.

Such fears have lent support to the safe-haven US Dollar, drawing investors away from risk-on currencies such as the Pound.

Capping more significant Sterling losses are comments from the Bank of England (BoE)’s Governor Andrew Bailey, who repeated yesterday his position that interest rates could rise before the bond-buying scheme concludes.

Australian Dollar (AUD) Struggles as Retail Sales Reveal Continued Losses

The Australian Dollar is trending down overall as a downbeat market mood depresses trading sentiment. Retail data published this morning exacerbated ‘Aussie’ downside, as sales were down for a third consecutive month, albeit by less than expected.

Ongoing restrictions prevented significant spending, as social freedoms were curbed on continually high case numbers. While residents of some regions in Victoria will be able to travel up to 15km from home for exercise and shopping from this evening at 11.59pm, Muswellbrook and Port Macquarie now face a new lockdown as infections climb.

This morning’s report revealed that sales in New South Wales last month fell 3.5% to the state’s lowest level since April 2020, when the pandemic first hit; meanwhile, a snap lockdown on 12 Aug significantly restricted non-essential retail in the Australian Capital Territory, sending sales tumbling 19.9%.

According to Ben James, an official at the ABS:

‘Retail turnover continues to be negatively impacted by lockdown restrictions, with each of the eastern mainland states experiencing falls in line with their respective level of restrictions… In direct contrast, states with no lockdowns performed well.’

Potentially capping further AUD losses is the extent of the fall in sales: analysts predicted a 2% contraction, but the release showed a lesser fall of 1.7%.

Food spending saw the largest rise at 2.1%, limiting downside as households splashed out on home dining.

GBP/AUD Exchange Rate Forecast: Pound to Find Support on Consumer Credit?

Looking ahead, tomorrow’s consumer credit release from the BoE may propel the Pound up against the majority of its peers, if borrowing rises to £0.3bn as expected.

Later in the week, Australian manufacturing data could supply tailwinds to the Australian Dollar, as both the Ai group manufacturing index and Markit manufacturing PMI for September are set to increase on last month.

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