GBP/AUD continues the steep uptrend that started on Tuesday. The pair has just updated the highest level since mid-2016.
Currently, the quotation is fluctuating around 1.9167, up 0.22% as of 5:50 AM UTC. The price has recently broken above the strong resistance level of a double top pattern that formed at the end of November.
The Aussie gave up any hopes to take the initiative after the Australian Bureau of Statistics (ABS) released retail sales and trade balance data.
Retailers had a difficult month in October as households were not willing to spend their cash even amid lower interest rates and tax cuts.
Australian retail sales were unchanged in October at A$27.6 billion ($18.73 billion), while economists expected a 0.3% gain. Department stores, clothing, and home wares noted a decline in sales. Thus, clothing and footwear sales figures fell by 0.8%, household good sales declined by 0.2%, and department stores saw a 0.8% drop. On the other side, cafes and restaurants reported a 0.4% lift and food retailing rose 0.1%.
In a separate statement, the ABS said that the trade surplus declined by over 30% in October, as resource exports tumbled. Australia’s total exports fell 5%, which hit the trade surplus that shrank to A$4.5 billion.
Iron ore exports declined by A$1.2 billion as prices departed from their highs. Gold exports dropped by A$666 million.
CBA economist Belinda Allen commented:
“The first look at Australia’s external performance for Q4 suggests the era of very large trade surpluses could be behind us. Commodity prices were lower in both October and November, and as a result there are downside risks to export values in coming months.”
Exports have been a major contributor to the country’s gross domestic product (GDP) growth, so the chances are that Australia will record another disappointing quarter.
Now investors are pricing in a 60% chance that the Reserve Bank of Australia will cut the interest rates again in February of next year.
Elsewhere, the sterling is supported by hopes that Prime Minister Boris Johnson’s Conservative Party will secure more seats in the Parliament after the national election on December 12.