interbank midrate

Momentum in the British Pound (GBP) continues through last week off 0.5170 (1.9350) areas against the Australian Dollar (AUD) to reach 0.5075 (1.9700) in overnight trading. Risk flows have favoured safe haven currencies since last week’s US Non-Farm Payroll release raising questions around global growth concerns. Moving averages are signalling further pain for the AUD after clearing the 0.5130 (1.95) zone, we expect downside moves to dominate price action this week.

Current Level: 0.5091
Support: 0.5050
Resistance: 0.5125
Last week’s range: 0.5079- 0.5170

UK Trade, GDP growth and Industrial and Manufacturing Production numbers will all be released in the coming week. These have all shown recent signs of improvement in previous weeks. If the stronger economic performance continues expect an improvement in short-term confidence, which may add some support to the GBP.

The current interbank midrate is: AUDGBP .5115 GBPAUD 1.9550

The interbank range this week has been: AUDGBP .5110 – .5165 GBPAUD 1.9344 – 1.9595

The cross rate with the GBP is trading around 0.5150, but could slip further as interest rate differentials expand and tougher UK budget conditions prevail. The UK Government has promised higher taxes and spending cuts, which does not bode well for the near future. Manufacturing PMI data did show signs of improvement and a stronger economic cycle, could brighten future prospects.

Current Level: 0.5155
Support: 0.5100
Resistance: 0.5300
Last week’s range: 0.5119- 0.5178

The improvement in economic sentiment and confidence in the UK economy, following the election of the new Labour Government has seen support for the GBP improve. This has allowed the cross rate to move back towards 0.5100. The higher interest rates in Australia will ensure support for the currency, as the Bank of England continues to cut rates. The other threat to the GBP, is the looming first Labour budget. Serious and challenging economic conditions remain in the UK, and the preference for improving a dire fiscal position, may tempt the Government to raise tax rates. This could have a negative impact and ensure some upside for the AUD, in terms of the cross-rate.

The current interbank midrate is:              AUDGBP .5160  GBPAUD 1.9379

The interbank range this week has been:    AUDGBP .5100 – .5170            GBPAUD 1.9342 – 1.9607

The Bank of England have cut interest rates, thereby attracting flows to the AUD, commodity currency. The cross rate has not varied too greatly as the GBP undergoes a honeymoon period, under the new Labour Government, and support for the GBP has been improving. This will likely not continue and expect the downward pressure, on the cross, to favour the AUD.

Current Level: 0.5090
Support: 0.5050
Resistance: 0.5200
Last week’s range: 0.5120- 0.5190

The Australian Dollar (AUD) lost momentum midweek against the British Pound (GBP) dropping from 0.5180 (1.9300) to 0.5120 (1.9530) as “risk on” turned. RBA Minutes highlighted board members considered raising rates but decided that a steady as she goes approach would work best to balance inflation and economic risks. UK Manufacturing and Services sectors both showed improvements this week with Services up at 53.3 from 52.5 while manufacturing improved to 52.5 from 51.1. The Bank of England (BoE) should pause interest rates in September after cutting on the 1st of August. A weekly close around 0.5090 (1.9650) is predicted.

The current interbank midrate is: AUDGBP 0.5122 GBPAUD 1.9523

The interbank range this week has been: AUDGBP 0.5119- 0.5188 GBPAUD 1.9274- 1.9534