The GBP AUD exchange rate was -0.38% lower despite weaker Westpac consumer confidence data. The consumer data could hurt the Reserve Bank of Australia’s rate hike plans if consumers rein in spending.
The GBP to AUD rate trades at 1.7590. It looks for a catalyst to break from consolidation.
Confidence drops among Australian consumers again
According to survey data from Westpac on Tuesday, Australian consumer confidence dropped again to new lows in July due to surging inflation and interest rate hikes.
The Westpac-Melbourne Institute Index of Consumer Sentiment dropped by 3% to 83.8 in July from 86.4 in June. The index is now down by almost 20% since December, Westpac said.
The current pace of the decline in the index was also only seen in previous periods of significant disruption in the Australian economy. The survey gathered the views of 1,200 households from July 4 to 7.
The worst-performing sector of the index was consumers’ opinion of the economy in the next five years, with a drop of 6.7 per cent to 91.6. Meanwhile, the twelve-month outlook dropped by 4.2 per cent to 80.3. According to Westpac, the Reserve Bank of Australia expects to raise the country’s interest rates by another 50 basis points in the August meeting to 1.85 per cent.
Westpac economist Bill Evans said the RBA must continue to take strong actions with policy, moving the cash rate from a “very stimulatory” starting point to a neutral one.
UK leadership race dogs the pound sterling
The pound sterling is suffering from uncertainty with the UK leadership race.
The Bank of England Governor criticised Chancellor Nadhim Zahawi for discussing tax cut plans in public, while the former Chancellor called such a move fantasy.
Meanwhile, Priti Patel will not join the crowded leadership despite ‘encouragement’ from fellow ministers. She distanced herself from the role of PM after receiving recent criticism for the Rwanda deportation plans. She asserted that, like all conservative MPs and party members, she would listen to all the cases brought forward by the candidates, trusting the contest would encourage a positive spirit that unites the party.
Wednesday will have a potentially volatile day for the pound sterling versus the Aussie dollar, with growth figures released for the UK in May. The year-on-year growth performance indicates a drop from 3.4% to 2.7% in the latest reading.
The country expects monthly growth at 0% after last month’s weaker 0.2%. A negative performance could see the pound test the previous lows from this year.
The country saw negative numbers on Tuesday after retail sales dropped by 1% in June. Helen Dickinson, chief executive of the British Retail Consortium (BRC), said that sales volumes fell to pandemic levels as inflation continues to sting and households reduce spending. In particular, discretionary purchases suffered, including white goods and homeware. Consumers opted for cheaper brands in both food and non-food items.
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The post GBP AUD Drops Despite Weaker Westpac Consumer Data appeared first on Pound Sterling Forecast.
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