The British pound dropped against the Australian dollar on Thursday after retail sales data from Australia helped ease some of the damage to the currency from concerns over ongoing bushfires. The British pound was mostly firmer but lost out to the Aussie as markets turned lower following a disappointing jobs report from the United States.
GBP/AUD was lower by 53 pips (-0.28%) to 1.9001 as of 2pm GMT, leaving the currency pair up on the week but little changed over 24 hours.
Australian retail sales data rose 0.9% in November, beating economist predictions of a 0.4% rise. The data was collected before the bushfires started so doesn’t reflect the current economic reality in Australia. Nonetheless the idea that Australian were in better shape than previously thought before the fires began should limit any fall in consumption and the negative impact that could have on the economy.
The gains in the month of October can in part be explained by the rising popularity of the Black Friday shopping sales in Australia. Amazon has built larges warehouses in the country, adding to the speed of shipping and the popularity of online shopping. Looking further out, market sentiment towards the Australian dollar still looks fragile with many calling for an interest rate from the RBA to cushion the economic damage of the bushfires.
The pound has not shaken off the dovish comments made by Bank of England Governor Carney by Friday but the Brexit Withdrawal Agreement bill passing in the House of Commons with a majority of 99 votes was a positive for the currency. The big vote in favour of the bill was possible after the large Conservative Party victory in the 2019 general election. Coming up next week, the bill will move to the House of Lords. The Lords will likely be sensitive about being looked at by the public as frustrating the legislation if they choose to add amendments to the bill. Any Lords amendments will probably ultimately be rejected by the government anyway, giving enough time to meet the January 31 Brexit deadline.