• Australian retail sales jump +16.3% vs -17.7% decline in April
  • Australian Dollar (AUD) gains on economic recovery optimism
  • Pound (GBP) struggles despite retail sales +12% vs 5.7% forecast
  • Pound Australian Dollar exchange rate (GBP/AUD) trades sub 1.81

Optimism surrounding the Australian economic recovery is boosting the Australian Dollar on Friday. The Aussie Dollar is gaining ground versus the Pound for a third straight session and is on track to rally 1% across the week.

At 08:15 UTC, GBP/AUD is trading -0.15% at 1.8099, after hitting a 2-week low. The pair trades at the lower end of the daily range following retail sales data from both UK and Australia.

Australian retail sales surged in May as the large-scale easing of lockdown measures saw entire sectors of the economy re-open, fuelling a broad-based recovery in sales. As strong rebound comes after retail sales plunged in April.

Retail sales jumped +16.3% in May, up from -17.7% decline in April. Sales wee also up 5.3% on May last year.

The impressive rebound in sales suggests that consumers spending will be higher than initially feared in the second quarter of the year. This is offering some hope that the economic downturn in Australia won’t be as harsh as originally expected. The data also supports comments by Reserve Bank of Australia Governor Dr Philip Lowe who said that the downturn will be less severe than feared, even as Australia is heading for its first recession in three decades and unemployment is on the rise at 7.1%.

The Pound is trading lower, despite stronger than forecast retail sales. UK retail sales rebounded in May, jumping 12%, after declining -18.1% in April. Whilst the reading was significantly ahead of expectations the Pound is still being weighed down by the BoE monetary policy announcement yesterday.

The central bank left interest rates unchanged and increased its asset purchase programme by £100 billion, as expected. However, the central bank also said that it was slowing asset purchases, a slightly hawkish move which caught investors off guard.