The Pound to Australian Dollar (GBP/AUD) exchange rate has recorded gains following the release of favourable UK data. The British Retail Consortium (BRC) announced that retail spending had recovered slightly in October after a dramatic fall in September. The September report showed a -2.1% contraction on a like-for-like basis, but this neutralised at 0.0% in October on the year.
Big Ticket Sales see Pound to Australian Dollar (GBP/AUD) Exchange Rate Climb
One of the most influential factors for the increase in UK sales was the purchase of big ticket items such as furniture. The BRC stated that total retail spending was 1.4% higher than this time last year despite like-for-like sales being flat.
BRC Director General Helen Dickinson commented: ‘The good news is that overall retail sales continued to grow although not as fast as this time last year. Retailers have thought creatively about marketing solutions to incentivise sales of winter merchandise during the warmer weather. For example the use of analytics has enabled loyal customers to be offered targeted flash reductions with sale items being made available both in store and online.’
Discounts could be set to continue through the Christmas period after the warmer weather has seen fashion outlets left with a large amount of winter stock. Dickinson continued: ‘Consumers are still prioritising household items such as furniture over fashion, with furniture outperforming all other categories for a second month in a row.’
In addition, superstores like ASDA and Tesco are in a price battle as German discount stores such as Aldi and Lidl increase their presence.
Australian Dollar to US Dollar (AUD/USD) Exchange Rate Falls
Meanwhile, the Australian Dollar has been trending lower as the US Dollar (USD) regains strength against other currency majors. The US Dollar took a pause in its recent rally when last week’s US employment data disappointed.
However, as investors adjust their bets for the prospect of a Federal Reserve interest rate hike, currencies like the Australian Dollar are losing favour.
Analyst David de Ferranti commented: ‘Traders have had some time to digest Friday’s disappointing headline Non-Farm Payrolls print, and have likely recognised that it doesn’t materially alter the prospect of Fed policy normalisation, which is US Dollar positive. This could keep the Australian Dollar under pressure, with sellers sitting nearby at the 86.60 US cent mark.’
Pound to Australian Dollar (GBP/AUD) Exchange Rate Forecast
The Australian Dollar was little affected by domestic data published during the local session. Australian NAB Business Conditions rose in October from 1 to 13. However, NAB Business Confidence took a dip to 4 index points from 5. In addition, the Australian House Price Index fell in line with economists’ expectations in the third quarter, coming in at 1.5% after quarter two’s 1.9% growth. The annual figure softened to 9.1% from 10.1%, slightly above economists’ 8.8% forecasts.
The Pound to Australian Dollar (GBP/AUD) exchange rate is currently trading at 1.8397 and the Australian Dollar to US Dollar (AUD/USD) currency pair is reaching 0.8599.
AUD/GBP Advances on BoE Inflation Report, AUD/USD Depreciates
The Australian Dollar advanced against the Pound on Tuesday as investors anticipate the Bank of England Inflation Report on Wednesday. The Pound could trend lower throughout the rest of the week if the central bank takes a gloomy tone.
Westpac commented: ‘The BoE Inflation Report this week may not be constructive for GBP – lower energy prices, a slight cooling in activity and lower actual inflation trends flag a less hawkish BoE posture in the Inflation Report.’
Inflation in the UK is presently at a five-year low at only 1.2%. If forecasts for price growth are significantly cut, the Pound is likely to weaken.
Australian Iron Ore Prices could Hinder Australian Dollar Exchange Rate
The Australian Dollar has the potential to soften against other currency majors if the price of iron ore drops as Citigroup has forecast. 2015 predictions have slipped by 23%, with Citigroup expecting iron ore to reach $60 per metric ton.
Citi stated: ‘We expect iron ore prices to fall into the $50s – We have downgraded our price forecasts… briefly dipping into the $50s – with annual averages of $65 in 2015 and 2016’
However, with Australia’s largest commodity value expected to fall, the Trans Tasman currency could soften significantly.
Citigroup’s Ivan Szpakowski commented: ‘We expect renewed supply growth to once again drive the market lower in 2015, combined with further demand weakness.’
Australian Dollar Boosted by Strong Business Conditions
The Australian Dollar has extended its gains on Wednesday against both the Pound and the US dollar as a result of upbeat Business Conditions figures. Furthermore, Wednesday has seen an increase in Westpac’s Consumer Confidence report which rose from 94.8 to 96.6 in November. The Australian Wage Cost Index remained in line with economists’ expectations, another aspect which could offer the ‘Aussie’ exchange rate some support.
With a lack of highly influential US data out today, the ‘Greenback’ may continue to trend in a narrow range against other majors. However, the UK will release employment data as well as the BoE Inflation Report which could see significant Pound movement.
Bank of England Inflation Report Confirms Fears of Price Growth Cuts
The Bank of England Inflation Rate report suggested that UK consumer prices will struggle to grow near the Monetary Policy Committee’s 2% target over the next few years. Furthermore, the central bank suggests that inflationary levels could dip below the 1% mark in upcoming months.
The report also discussed the topic of UK interest rates, which stated that expectations for increases in borrowing costs could be expected in August 2015. Some investors were hoping for interest rate hikes in early 2015 and as a result of the inflation report, the Pound has plummeted.
Bank of England Governor Mark Carney has answered questions at a press conference following the report which could impact the Pound exchange rate.
Bank of England Chief Forex Dealer Fired
The Bank of England also announced that its chief foreign exchange dealer Martin Mallett was sacked after being aware of activity that aided rigging of the forex market.
Governor Carney stated: ‘We’re disappointed because we hold ourselves to the highest standards–we have an outstanding markets division. What Lord Grabiner found was that out chief dealer was aware of circumstances in the market that could facilitate or lead to improper behaviour by market participants.’
Pound (GBP) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
,Pound , 0.7886,
US Dollar,,Pound , 0.6320,
Canadian Dollar,,Pound, 0.5597,
Australian Dollar,,Pound, 0.5522,
New Zealand Dollar,,Pound, 0.4961,
[/table]
