GBPAUD surged Wednesday after the UK inflation figure surprised markets with a reading above 5.1%.
GBPAUD – Daily Chart
GBPAUD surged in 2024, moving from around 1.870 to 1.933. This resistance level for the GBPAUD goes back to October, but there is room to move above that level if the rally continues.
The British pound has surged against the Aussie dollar as the Reserve Bank of Australia held back on interest rate hikes. The UK had higher inflation, and traders expect a premium over the Aussie rate. The focus has since turned to the UK’s weak economy and expected rate cuts. However, that belief has been rocked by today’s inflation above 5%.
The Australian economy has also struggled to balance the exchange rate recently.
The resistance level will be tested tomorrow due to employment figures for the Australian economy being released at 8:30 am HKT. After posting 61.5k new jobs last month, the number is expected to slow to 17.6k this month.
The Australian dollar has been hurt recently by poor steel production from the Chinese economy. A GDP report showing Chinese growth at 5.2% for the year may boost the Aussie dollar.
Chinese steel production declined for a fifth consecutive month in December, falling 11.4% from November to 67.44 million tons. That marked the lowest monthly output since December 2017, according to NBS data.
“No way to ‘sugarcoat’ it, that’s just very weak Chinese steel production data for December,” said analyst Robert Rennie at Westpac Bank.