Aussie surged sharply on after the hotter-than-expected inflation print shattered hopes for a RBA rate cut next week. Crucially, the upside surprise wasn’t confined to energy-driven headline gains. The broad-based acceleration in core inflation confirmed that price pressures have become more entrenched.
RBA Governor Michele Bullock had warned earlier this week that any 0.9% or higher quarterly increase in the trimmed mean would constitute a “material miss.” The 1.0% outcome squarely fits that definition, virtually guaranteeing the central bank will keep rates unchanged at next week’s policy meeting. With economic activity showing tentative signs of recovery, the balance of risks has shifted decisively toward fewer rate cuts over the next year.
In the currency markets, Aussie’s rally coincided with broad-based weakness in the British pound, which remains weighed down by fiscal concerns following reports of a worsening UK budget shortfall. As a result, GBP/AUD has become the week’s standout mover for now, falling more than 1.5% to its lowest levels in months.
Technically, GBP/AUD’s break of 2.0240 support confirms resumption of the decline from 2.1643. More importantly, the decisive break below the 55 W EMA (now at 2.0309) reinforces a bearish bias, confirming a medium-term top at 2.1643 under bearish MACD divergence conditions.
The fall from 2.1643 high is viewed as at least correcting the entire rise from 1.5925 (2022 low), with scope to even reversing the whole move.
In either case, as long as 2.0858 resistance holds, the outlook remains bearish with the next target at 38.2% retracement of 1.5925 to 2.1643 at 1.9459.
 reinforces a bearish bias, confirming a medium-term top at 2.1643 under bearish MACD divergence conditions.){kind=link}