The Australian Dollar (AUD), British Pound (GBP) has traded sideways over the past fortnight, pivoting around its current price of 0.5650 (1.7700) for much of the time. UK Inflation rose from 7.0% in March to 9% in April y/y, its highest level since 1982 prompted by huge price rises in electricity and fuel costs but the biggest rise came from housing costs and utility expenses up 19% putting the squeeze on real consumer spending. If we see inflation go above 10% for a sustained period in the coming months, the forecast cash rate peak of 1.25% in 2022 will look more like 3%. It’s a thin docket this week with just UK flash manufacturing tonight. We expect movement this week to stay within recent levels with small gains in the Pound possibly to 0.5620 (1.7800).
Current Level: 0.5634 (1.7749)
Resistance: 0.5805 (1.8120)
Support: 0.5520 (1.7230)
Last Weeks Range: 0.5612-0.5682 (1.7599-1.7819)