GBP AUD Higher Ahead of Australian Retail Data

GBP AUD Higher Ahead of Australian Retail Data

The GBP AUD exchange rate was 0.15% higher on Wednesday ahead of the latest retail sales data from Australia. Shoppers have returned down under after the latest reopening but there are concerns for 2022. Treasurer Josh Frydenberg also talked of a ‘strong economy’.

The GBP AUD exchange rate was trading at 1.8530 ahead of the economic data.

Australian shoppers set for a black Friday splurge

The mood among Australian consumers improved in the last week as the nation recovers from the recent government lockdowns.

The ANZ-Roy Morgan consumer confidence index was higher by 1.3 per cent, recovering half of the previous week’s decline. Confidence surged 4.9 per cent in Victoria after the state removed all of its restrictions for the fully vaccinated.

Another boost was drop of 0.4% in the survey’s inflation expectations from a seven-year high to 4.6 per cent.

“This indicator can be volatile from week-to-week, so we are cautious about overreacting to one survey reading,” ANZ head of Australian economics David Plank said.

“If the fall in inflation expectations is sustained, however, it may be an important signal for wages growth,” he added.

The uptick in consumer confidence – a signal of future household spending – comes ahead of the weekend’s Black Friday sales when billions of dollars are predicted to be spent.

Australian retail sales on Thursday are expected to show a 2.5% improvement from 1.3% last month.

Treasurer talks up economy, exporters also positive

Australia’s exporters are also expecting a strong recovery in in 2022 with the reopening of international borders. The DHL export barometer said 69 per cent of businesses surveyed are expecting exports to increase next year, up from a 19-year low of 47 per cent in 2020.

However, freight costs are still a potential headwind for the industry with DHL’s Gary Edstein saying:

“International travel restrictions that created a shortage in airline cargo capacity in 2020 have created flow-on effects to the cost of freight and the ability of exporters to visit business contacts and manufacturing facilities overseas”.

Meanwhile, treasurer Josh Frydenberg said tax relief and lower unemployment rates are signs of Australia’s “strong economy”.

“Last year we were facing economic Armageddon – there was some forecasts that unemployment could reach as high as 15 per cent,” Mr Frydenberg said.

“Today, unemployment is actually lower than when we came to government.”

He added that small business tax rates have come down to their “lowest level in 50 years,” and in the last three months, there has been tax relief of more than $10 billion.

“That is the product, that is the dividend of having a strong economy,” he said.

In the UK, the Bank of England’s Governor has said he might scale back policy guidance further. He said that decisions could be made on a meeting-by-meeting basis. His failure to raise interest rates in November were met with the jibe that he was an ‘unreliable boyfriend’ to traders.

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