Sterling Looks for Further Gains Versus Aussie Dollar

The Pound sterling is also looking to gain against the commodity-driven Aussie dollar. 

The British pound has surged over the last few weeks, and the U-turn by the government last week over its fiscal plans has boosted the currency further. 

GBPAUD – Weekly Chart

gbpaud weekly chart octoberGBPAUD trades near the 1.80 level and has 1.90 in its sights. 

Wednesday has inflation figures released for the UK economy, and last month dipped from 10.1% to 9.9%. This month is forecast to be back at 10%, so the pound could be supported by new highs. 

Later on Wednesday, we will get the release of Australian employment numbers. The forecast is for an additional 25k jobs. That is lower than last month but is not expected to hurt unemployment numbers. 

The new UK Prime Minister, Liz Truss, is already under pressure. Last week she sacked her chancellor and appointed Jeremy Hunt. Hunt stated nothing is “off the table” when asked if he would abandon more of Truss’s tax-cut plans to highlight that he is now the leading government voice on UK fiscal policy. Hunt declined to rule out a year’s delay to the prime minister’s plan to cut income taxes. 

“I’m not taking anything off the table,” Hunt said Sunday. “There is one thing we can do, and that is what I am going to do, which is to show the markets, the world, indeed people watching at home, that we can properly account for every penny of our tax and spending plans.” 

The pound sterling slumped to 1.60 after poor market reactions to a big-spending mini-budget with no real plan for paying it back after some chaos in the UK bond market.

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