AUDGBP: AUD to GBP forecast after upbeat UK and Australia retail sales

The AUD to GBP (AUDGBP) pair rose slightly after the Australian statistics bureau released weaker than expected retail sales numbers. The pair also reacted to the strong retail numbers from the UK.

AUDGBP reacts to Australia retail sales numbers

The volume of retail sales in Australia rose by 16.3% in May after falling by a record 17.7% in April. While this was a positive number, it was weaker than the 33.6% gain that analysts were expecting. The report showed that all sectors of the retail industry rose. Most of these gains were in clothing, footwear, and personal accessories as more people moved to buy after a month of being in lockdown.

Also, the office said that there was increased activity in the household goods industry and food retailing. These numbers show that the Australian economy is surely recovering after the government lifted the previous restrictions. The challenge going forward will be maintaining the momentum.

UK retail sales bounce back

The AUD to GBP pair also reacted to bullish retail sales from the UK. The data showed that the headline retail sales rose by 12% in May after tumbling by 18.1% in April. The sales were nonetheless 13.1% lower than in the same period last year.

The core retail sales, which excludes the volatile food and energy products, rose by 10.2% in May after dropping by 15.2% in the previous month. The sales were also 9.8% lower than in the previous year. The year on year numbers are understandable because the country was not in a lockdown in 2019.

The AUDGBP pair also reacted to public sector borrowing in the UK. According to ONS, the country’s government borrowed more than £54.5 billion in May. This was higher than the consensus estimates of about £47 billion. The government has continued to borrow in its bid to cushion the economy from the crisis.

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AUDGBP technical outlook

The AUD to GBP pair rose to an intraday high of 0.5520 after the better-than-expected retail sales. On the daily chart, the pair has moved above the 78.6% Fibonacci retracement level. It is also above the 50-day and 100-day exponential moving average. Also, the price is in a general upward trend as shown by the ascending red trendline. Most importantly, it is forming an ascending triangle pattern. This means that the pair will continue rising as bulls target the next resistance level at 0.5600.

On the flip side, a move below 0.5420 will invalidate this trend. This is an important psychological level that is also along the ascending trend line.

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