interbank midrate

UK inflation remains stubbornly high with the October number coming in at 2.3% against a consensus of 2.2%. This is much higher than the September figure of 1.7% with goods prices rising again. The Bank of England (BoE) meeting in December now suggests a “pause” is on the agenda with rate cuts also in February also now in question. Not “off the table” completely but reduced. UK Retail Sales prints tonight and should reflect a poor number as growth in the sector over November slumps. On the chart price has posted 0.5175 (1.9320) a 7-week low in the cross.

The current interbank midrate is: AUDGBP 0.5170 GBPAUD 1.9342

The interbank range this week has been: AUDGBP 0.5108- 0.5178 GBPAUD 1.9311- 1.9574

The rebounding UK economy may have hit a brick wall, with the advent of the Labour Governments first Budget. The Budget was a toxic combination of increased taxes, increased spending and greater deficits and debt. This is the recipe for disaster and are already being suffered, as witnessed in last week’s plunging GDP growth reading. Economic growth tumbled and now attention turns to UK inflation. If UK inflation reverses recent trends and heads north again, that spells ‘Trouble’. The cross-rate volatility has been limited as the AUD has suffered precipitous loses, along with the GBP.

The current interbank midrate is: AUDGBP .5140 GBPAUD 1.9455

The interbank range this week has been: AUDGBP .5090-.5140 GBPAUD

The Bank of England (BoE) cut their interest rate Friday from 5.00% to 4.75% as widely expected. The vote, an 8-1 decision was accompanied by benign policy guidance with a gradual approach to slowly removing restraints. The recent budget reinforcing a boost to growth and inflation. The British Pound (GBP) pushed higher over the news to0 0.5090 (1.9650). Heading into Tuesday the AUD has recovered slightly to 0.5110 (1.9570) as we await Australian Jobs data this week.

Current Level: 0.5107
Support: 0.5080
Resistance: 0.5175
Last week’s range: 0.5055- 0.5147

The RBA held interest rates unchanged Tuesday at 4.35% as we expected emphasising the need to remain focused on upside risks to inflation. The Australian Dollar (AUD) rising to 0.5055 (1.9780) before returning to post 0.5112 (1.9560) as US Election voting kicked in. The first rate cut for the RBA may not come until the February meeting in 2025. The RBA may wait until the 4th quarter CPI release on the 29th of January 2025 before making a decision on this. The Bank of England are widely expected to cut 25 points in the morning to 4.75% however they may signal a shallower easing cycle if new budget forecasting comes into play.

Current Level: 0.5100
Support: 0.5040
Resistance: 0.5170
Last week’s range: 0.5029- 0.5109

The Australian Dollar (AUD) bounced back hard from 0.5030 (1.9880) midweek to trade into Friday around 0.5110 (1.9580) post the announcement of the UK Budget. Chansellor Reeves investment plans started a sell off in UK Bonds and improved the Aussie back to the weekly open. Earlier, Wednesday’s Australian CPI y/y release also bought buyers back into the AUD when the report showed a drop from 3.8% to 2.8% in the third quarter print the lowest figure since Q1 2021. Attention now lies with next week’s Bank of England (BoE) cash rate release.

The current interbank midrate is: AUDGBP 0.5100 GBPAUD 1.9607

The interbank range this week has been: AUDGBP 0.5029- 0.5109 GBPAUD 1.9572- 1.9884