Ahead of the publication of UK retail sales figures the Pound was trading in a weaker position against the Australian Dollar.
Although the Pound broadly strengthened yesterday as Bank of England official Martin Weale argued that UK interest rates would be normalised as the nation’s economy recovers, the GBP to AUD pairing failed to make any headway.
Sterling advanced to a two-week high against the Euro and gained on the US Dollar as Weale was quoted as saying that the UK economy is performing well, but that interest rates may need to be increased sooner than currently expected if inflation pressures build.
Weale stated; ‘While I expect interest rates to remain low over the next two to three years, it is not possible to guarantee this.’
However, while these remarks boosted the Pound against its peers, the ‘Aussie’ was also riding high and kept Sterling at bay overnight.
Reserve Bank of Australia Governor Glenn Stevens bolstered confidence in Australia’s recovery earlier this week by intimating that domestic demand would take over from mining output as the main driver of economic growth.
Stevens also kept warning remarks regarding the ‘Aussie’s strength to a minimum.
In the view of currency strategist David Forrester, improved Australian sentiment is having a positive impact on the nation’s currency. He states; ‘We’re likely seeing a pick-up in investor inflows into Australia. Part of that confidence from buying Aussie assets comes from two factors. The first one is that the Aussie fell about 15 per cent last year, so investors feel more comfortable that it’s probably not overvalued by a significant amount. And the second one is that we no longer have a central bank talking down the currency.’
However, during European trading the GBP to AUD exchange rate fluctuated in response to UK retail sales data.
The report showed that UK sales surged by 1.8 per cent in February, month-on-month, following a negatively revised drop of 2.0 per cent in January.
Economists had expected a monthly gain of 0.3 per cent.
On the year retail sales were up 4.2 per cent last month, considerably more than the annual increase of 2.9 per cent expected.
Retail sales including auto were up 1.7 per cent on the month.
This report indicates that UK consumers bounced back following a slump in January (largely the result of unusually adverse weather conditions) and the better-than-expected result could boost the Pound in the hours ahead.
With China’s leading index and final fourth quarter UK growth data due out tomorrow, additional Pound to Australian Dollar movement could occur before the weekend.
Australian Dollar (AUD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Australian Dollar,
,US Dollar, 0.9236,
Australian Dollar,,Euro, 0.6704,
Australian Dollar,,Pound, 0.5576,
Australian Dollar,,New Zealand Dollar, 1.0652,
US Dollar,,Australian Dollar, 1.0827,
Euro,,Australian Dollar, 1.4910,
Pound Sterling,,Australian Dollar, 1.7945,
New Zealand Dollar,,Australian Dollar, 0.9387,
[/table]
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