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GBP/AUD – Headed for 1.8300?
As the week has progressed it has become clear that the direction of interest rates in Australia and UK is starting to widen out. The tepid inflation numbers from Down Under have obliterated any expectation of tightening from the RBA for the foreseeable future and the Aussie has suffered as a result pushing towards the 9250 level and possibly moving towards 9200 next week. Meanwhile the data from UK continues to impress and despite the hesitation from BoE, the UK central bank is clearly on the way to tightening by end of 2014. Tonight’s UK Retail Sales which look too be strong given the better than expected print on BRC could be just another data point for cable bulls. In short GBP/AUD is primed to move higher with 1.8300 in view.
Technically GBP/AUD looks to have made a good rounded base with support at the 1.8000 level and looks ready to push through 1.8200. A break there opens a run towards 1.8300 while a fall towards 1.8100 could force a retest of the recent lows below 1.8000.