FX News

AUD/GBP Conversion:

The Australian Dollar (AUD) moved off the early 6 week low of 0.5595 (1.7880) against the British Pound (GBP) Monday well supported against a “risk” off backdrop recovering to 0.5710 (1.7520) Wednesday as equity markets posted gains. UK economic data of late hasn’t been flash with UK debt service and public sector wage costs blowing out and Bank of England’s Bailey on the wires less hawkish. Aussie CPI has again as predicted ballooned to 5.1% year on year from 3.5% rising 1.4% q/q ending March. This raises the question of when and how much the RBA could/should raise interest rates at next week’s meeting. As inflation is miles outside the target band now, we expect a hike of 0.15% to 0.25% with a possible monster rise in June if an economic perfect storm develops. Late next week we have the Bank of England (BoE) Monetary Policy Report and official cash rate with expectations of a hike to 1.0% from 0.75%. The BoE have previously said they would start selling bonds when the rate hits 1.0% but we think they will wait a while longer. On the chart – a retest of 0.5620 (1.7800) looks possible.

Current Level: 0.5677 (1.7614)
Resistance: 0.5800 (1.7900)
Support: 0.5585 (1.7250)
Last Weeks Range: 0.5630-0.5718 (1.7488-1.7757)

Previous ArticleNext Article