interbank midrate

The Australian Dollar (AUD) travelled to the bottom of the recent channel range over the week reaching a low of 0.5250 (1.9050) against the British Pound (GBP) before bouncing off Resistance to gain an edge around 0.5270 (1.8965) into Friday. We are not sure this will continue with UK elections polling in play, any certainty should send the AUD lower. At the moment the UK’s Labour party is expected to take a massive victory over the coming hours ending 14 consecutive years of Conservative leadership with around 39% of the vote compared to 22% for the Conservatives. Earlier Australian Retail Sales came in above expectations at 0.6% in May and the RBA minutes signalled they could hike interest rates at their August meeting improved the AUD.

The current interbank midrate is: AUDGBP 0.5274 GBPAUD 1.8960

The interbank range this week has been: AUDGBP 0.5249- 0.5287 GBPAUD 1.8911- 1.9051

The Conservative party led by Rishi Sunak are behind in the polls showing the Labour party have an edge. The British Pound (GBP) has come off the recent long term high at 1.8900 to fight back to 0.5265 (1.9000) into morning trading. Prices at 0.5290 (1.8900) have not been seen since early January. Better than expected UK GDP helped improve the GBP off the weekly open as well. Later today we have RBA minutes who will reconfirm high inflation will keep the cash rate higher for longer. Following this is Australian Retail Sales expected to come in hot.

Current Level: 0.5259
Support: 0.5235
Resistance: 0.5290
Last week’s range: 0.5233- 0.5288

The Australian Dollar (AUD) retested the 5-week high at 0.5280 (1.8940) off the open against the British Pound (GBP) but has since surrendered giving back gains to 0.5245 (1.9070) this morning. The Pound initially coming under pressure from a dovish leaving Bank of England and softer UK PMI read. Risk off flow could see the Aussie get pushed lower this week, however Australian CPI could have the opposite effect. Markets are expecting May Inflation y/y to come in higher than the current 3.6% at 3.8%. This would be quite remarkable given the RBA are the only mainstream central bank still considering hikes.

Current Level: 0.5246
Support: 0.5200
Resistance: 0.5290
Last week’s range: 0.5198- 0.5275

The Australian Dollar (AUD) has had a bumper week against the English Pound (GBP) extending moves higher midweek to reach a fresh 4 week high of (0.5265) 1.8990 into Friday. The Bank of England interest rate remained unchanged at 5.25% overnight in a 7-2-member vote devaluing the GBP as investors suggest the central bank could start cutting rates from August. Certainly, early week CPI data confirms this with the UK inflation rate falling into the BoE target zone at 2.0% y/y from 2.3% in April. Meanwhile the RBA also released their cash rate which remains steady at 4.35% with the central bank leaving the door open for potential to hike rates further if price pressures remain high. The upside trend in the AUD should get stiff resistance towards 0.5290 (1.8900)- prices have not been this high since late January.

The current interbank midrate is: AUDGBP 0.5256 GBPAUD 1.9025

The interbank range this week has been: AUDGBP 0.5198- 0.5265 GBPAUD 1.8993- 1.9236

Range trading in the British Pound (GBP), Australian Dollar pair continue with prices around 0.5210 (1.9200) into Tuesday. We expect a little more volatility over the week with both the Bank of England (BoE) and the Reserve Bank of Australia (RBA) announcing rate statements. Both are expected to keep rates unchanged, but the RBA could be hawkish. This would be good for the AUD if rate policy rhetoric remains “higher for longer”. As for the BoE – members are expected to vote 7-2 in favour of a “hold”. UK inflation prints tomorrow and is predicted to dip from 2.3% y/y to 2.0% supporting cuts to come. We expect price to retrace to retest 0.5240 (1.9090) over the week.

Current Level: 0.5206
Support: 0.5155
Resistance: 0.5240
Last week’s range: 0.5170- 0.5223