GBP/AUD: Pound Advances for Third Consecutive Day

GBP/AUD continues to follow a modest uptrend that started late Monday. While the pair has recently broken above the resistance line of a steep downtrend, the bears may come back stronger after the holidays. Today, both the UK and Australian markets are closed all day on Boxing Day, after being closed for the Christmas Holiday.

Currently, one British pound buys 1.8744, up 0.10% as of 6:50 AM UTC. If the pair manages to close above the open price, this will be the third positive session for the sterling. Yesterday, the pair gained 0.14%. Last week, the price saw the worst performance in years, losing over 3.60% until last Monday.

The pound crashed against majors after UK Prime Minister Boris Johnson expressed his intentions to rule out any attempt to extend the deadline of the Brexit transition period, which is currently set for December 2020. He managed to get the parliament’s approval when lawmakers voted the amended Withdrawal Agreement Bill (WAB).

The Aussie is under pressure as retail sales growth during the Christmas holidays are expected to slow to levels not seen since the global financial crisis in 2008. Russell Zimmerman, CEO of Australian Retailers Association (ARA), warned retailers to expect financial crisis-like conditions. Retailers are waiting to see how much household are ready to spend during Boxing Day, which is the highlight of the Australian shopping calendar.

Zimmerman predicted consumers would spend $2.5 billion until the end of the day, but he became uncertain of the figure. He said:

“I wasn’t entirely confident we’d hit those big numbers. There is a whole raft of changes in retail that we’re grappling with as we move forward.”

Zimmerman was more optimistic after seeing the crowds in malls earlier during Boxing Day, but the growth in retail sales is still modest, with only a 2.3% increase compared to last year’s figure. ARA’s prediction for the pre-Christmas period starting with November 14 showed a rise of only 2.6% compared to 2018. Zimmerman said:

“Not since the GFC (global financial crisis) have we forecasted such slow growth. Retailers usually expect a three in front of that number. I believe this is the new normal. I don’t think retailers should be expecting the increases that they are used to any more.”

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