Pound to Australian Dollar Exchange Rate Dips Following Poor UK Food Sales
The Pound (GBP) was trading between the boundaries of 1.8083 at the session’s lowest point and 1.8141 at its pinnacle against the Australian Dollar (AUD) on Tuesday. The Pound to Australian Dollar exchange rate dipped following a flop for the Pound after poor food sales figures were revealed; in comparison to favourable Australian Business Confidence data.
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Tuesday’s figure revealed food sales in the UK dropped to their lowest number in over five years dropping by -0.3% in July; despite economists’ forecasts to reach 0.9%. June had previously shown a negative statistic falling by -0.8%.
Forex expert Jeremy Stretch stated: ‘The retail sector is not looking quite as robust as it was earlier in the summer and as a consequence of that, that will keep Sterling a little bit on the defensive. We’ve got markets increasingly focusing on that quarterly Inflation Report as well, but I think there’s still a risk that Sterling has a little more downside to come in the shorter term.’
However, other sales in the UK—such as furniture retailing—have proven more favourable. Expert in the field David McCorquodale stated: ‘While non-food retailers had a stellar month surpassing even last year’s record sales performance, the grocers saw sales tumble in value as their competitive pricing continued.’
However the UK eagerly anticipates the release of the Bank of England’s (BoE) Inflation Report, which should give direction to the current trajectory of the UK economy.
The Inflation Report is highly anticipated as an indicator of the plan to raise interest rates in the UK in the near future. Despite the BoEbeing unreliable with their statements in reference to the time frame of their hikes, the most recent figures for the UK economy appear to have shown slack still remaining, and a string of negative data has been released as a consequence.
Previous to the latter month, the UK was outperforming by way of favourable data, showing high figures which encouraged investors to push the Pound to US Dollar (USD) exchange rate up above the 1.71 threshold.
The Australian Dollar however produced favourable Business Confidence figures on Tuesday, reaching 11 in July, higher than the 8 in June suggesting businesses in Australia are faring well.
Expert in the field David de Ferranti stated: ‘The leading indicators continue to demonstrate resilience and are a positive sign for the health of the Australian economy. However, today’s [Tuesday’s] data is unlikely to materially shift the rate outlook while the Reserve Bank of Australia remains concerned about the fragility of the domestic labour market.’
As the Australian Dollar trades amid less than favourable employment conditions, the ‘Aussie’ may not gain the opportunity to rise in the currency market against other majors.
De Ferranti continued: ‘Pessimism over employment conditions could keep the gauge of sentiment subdued which may fail to lift the “Aussie”.’
Today will prove highly influential for the Pound to Australian Dollar exchange rate with the UK producing a mass of data amongst the Inflation Report such as Average Weekly Earnings, Claimant Count Rate, Employment Change, Weekly Earnings and Jobless Change. However, in a fairly quiet week for Australia by way of data publications, reflections of other majors in the currency market will be the deciding factors for movement in the ‘Aussie’, along with any geopolitical escalations.
The Australian Dollar to Pound exchange rate was trading between 0.5509 and 0.5527 on Tuesday.