gbp-aud-forex

The British pound is higher against the Australian dollar on Friday.

  • GBP/AUD to finish week higher after touching 11-month low
  • UK June retail sales, July flash services PMI top expectations
  • Chin orders the closure of US consulate in Chengdu
  • Broader sentiment shaken by pickup in US China tensions

GBP/AUD was up by 81 pips (+0.44%) to 1.8026 as of 4pm GMT. This week the pound-Aussie exchange rate is on course to finish +0.38%.

The currency pair traded steadily higher throughout the day, first taking out 1.79, then 1.80 later in the day. Yesterday it rose 0.66%.

GBP: UK retail data boosts pound

Having been battered down to 11-month lows against the Australian dollar this week, the British pound staged a two-day recovery to close out the week with gains.

Escalating US-China tensions have hurt the Australian dollar but weakness in the US dollar has helped Sterling and other major currencies as well as gold, which is close to a record high.

Better than hoped-for UK economic data and the rumoured creation of a UK infrastructure bank by the UK Treasury helped give the pound a nudge. The new bank would serve to replace the European Investment Bank after Brexit and help push forward Prime Minister Boris Johnson’s “Level Up” agenda.

June UK retail sales rose +13.9%, better than the +8.3% expected. That left retail sales down just -1.6% on a year-over-year basis, rather than -5.9% expected. Additionally, the UK flash services PMI rose to 56.6 when a rise to 51.5 was expected.

AUD: US China diplomatic flare up

The Aussie dollar turned lower alongside Chinese equities, where the benchmark CSI 300 was flattened by -4.4% after a fiery speech by US Secretary of State Pompeo in which he called for an end to ‘blind engagement’ with China.

On Friday China made a tit-for-tat response by ordering the US to close its consulate in Chengdu after the US ordered China to close its consulate in Houston. The new escalations mark a new high-point in tensions, which have been rising since the China-originated coronavirus pandemic and the new security law was passed in Hong Kong.


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