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AUD/GBP: Fresh Cycle Low, ToT Lowest Since January 2022


Softer than expected CPI and weaker equities weighed on AUD/GBP yesterday, the pair printed a fresh cycle low and its lowest level since February 2022 at £0.5282.

  • AUD/GBP is down ~3.5% from the April highs, the pair has extended losses in recent dealing after being unable to sustain a recovery through the 20-Day EMA.
  • Terms of Trade, as per Citi proxies, in terms of relative Australia/UK performance continue to tick lower against the AUD. We are now sitting at their lowest since January 2022, see the chart below. The sharp fall in iron ore through April has been a focus point, although we have stabilized somewhat in recent sessions.
  • The downtrend for AUD/GBP remains in place, bears now target the 2022 low at £0.5202.
  • Bulls first look to sustain a break of the 20-Day EMA (£0.5384).
  • The next major risk event for the pair is Tuesday's RBA Monetary Policy Decision, the bank is expected to keep the cash rate on hold at 3.60%.

Fig1: AUD/GBP vs Citi AU-UK Terms of Trade

Source: Citi/Bloomberg/MNI

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