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.