The Pound to Australian Dollar (GBP/AUD) exchange rate clawed back some of its losses on Friday, climbing by around 0.96%, after declining by around 2.0% on Thursday. The Pound also rose against the New Zealand Dollar (GBP/NZD) in Friday’s European trading. GBP slipped dramatically on Thursday as markets digested the minutes from the Bank of England’s (BoE’s) latest monetary policy meeting, and subsequent words from Governor Mark Carney.
However, Australian Retail Sales came in flat in September at 0.0%, giving Sterling some chance to rise. The figure surprised markets after economists had forecast a 0.4% rebound after a shock fall the month before.
ANZ representative Jo Masters commented:
‘The combination of international competition on prices and several headwinds hitting household balance sheets is proving a challenging mix. It will be interesting to monitor spending on household items in coming months given a slowing in the housing market.’
The third quarter of 2017 saw Australian retailers drop their prices in order to entice buyers, but even with the discounts, consumers seem to be happy to just browse and not buy. Consumers in Australia are stuck in a difficult position with weak wage growth and downward pressures on household incomes, stagnation in the housing market, high levels of debt, and increasing utility bills.
Meanwhile, in New Zealand, the Kiwi Dollar hit a two-week high versus the Pound (NZD/GBP) after the BoE news yesterday and has managed to recover some ground recently lost to the US Dollar (NZD/USD) after tumbling to a 17-month low. A political shakeup in the Trans Tasman nation has created some disruption for the New Zealand Dollar exchange rate, and the Kiwi hit a 17-month low against the Buck amid concerns that the new Labour government may play a part in keeping interest rates lower for longer.
Bank of New Zealand currency strategist Jason Wong commented:
‘We think there’s room for the NZD to recover further as domestic political risks fade with an eye on next week’s RBNZ [Reserve Bank of New Zealand] MPS [Monetary Policy Statement] as an additional possible source of upward pressure.’
The Pound to New Zealand Dollar (GBP/NZD) exchange rate currently resides at 1.8885. The Pound to Australian Dollar (GBP/AUD) exchange rate is hovering at levels of 1.7068.