GBP AUD Lower After Aussie Home Loans Data 

The GBP AUD exchange rate was -0.33% lower on Monday after stable home loans data soothed fears of a housing market slump. Rising interest rates made analysts worry that prices could drop for homes. Tuesday brings retail sales for the Aussie dollar and PMI for both the Australian and UK economies. 

The GBP to AUD rate failed to get above the key 1.7800 level and now trades at 1.7680. 

Australian home loans rise despite big bank rate hikes 

Home loans in Australia increased by 2.1 per cent in May, according to the Australian Bureau of Statistics on Monday. 

The A$21.18 billion figure was higher than forecasts,  beating analysts’ expectations for a 2.0 drop following a sharp 7.3 per cent fall through April. 

Analysts look for signs of stability in the market as the interest rate hikes begin and the country’s big banks raised their rates last week. 

Commonwealth Bank of Australia, which holds a quarter of the country’s A$2 trillion mortgages, raised its fixed-rate loans by 1.4 percentage points last week to catch up to the RBA rate hikes. ANZ followed with a 0.9 percentage point hike after the recent moves to counter inflation and end a long period of low rates in the housing market. 

“It’s a sign of things to come in the variable rate market,” said Brendan Coates of the Economic Policy Program at the Grattan Institute. 

The Reserve Bank of Australia meets for its latest monetary policy review on Tuesday and the bank is ready for another 50bps rate hike to 1.35%. 

“The RBA faces a dilemma at its forthcoming meeting. To hike by 25 bps or 50 bps? We feel the odds are stacking up firmly for 50 bps. Even in the event of a hawkish surprise, expect very limited benefits for AUD in the near term,” ING analysts said. 

UK retailers looking to Australia for global expansion 

British retail giants look abroad for expansion as the UK consumer struggles. Australia is a potential destination as the country rebounds from the pandemic. 

Property advisory firm Colliers said demand for UK locations from international firms also increased despite fears over cost-of-living pressures. Colliers said that 48% of its UK client businesses expect to open more international stores. 

Mike Ashley’s Frasers Group was one company looking to grab some of the Aussie and Kiwi consumer markets with a 29 per cent stake in the Australian e-commerce platform MySale. The pipeline will be elevated with the benefits “of counter seasonality between the European and Australian climates,” Frasers said. 

Tomorrow brings the latest retail sales figures for the Australian economy with an 0.9% rise expected, which would match the performance of last month. PMI data will also release in Australia ahead of the all-important Reserve Bank decision. That will be a big factor in the pound sterling’s recent struggles to top the 1.7800 resistance level. The UK has final readings for the June PMI data before a speech by the BoE Governor. 

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