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RBA Cuts Rates, UK Economic Growth Strengthens, and Canadian Inflation in Focus

RBA (Reserve Bank of Australia) reduced their interest rate levels by 25 basis point this morning, down to a total base rate of 4.1%. While the monetary action was expected, comments from its members show a hawkish outlook moving forward in 2025 – with potentially two additional cuts planned to bring down the borrowing costs to 3.6% later in the year. Governor Michele Bullock indicated a somehow more cautious approach, due to inflation threats still on the radar. To curb inflation levels, its therefor vital for the Australian central bank to take a cautious approach and not act to quickly and see inflation levels start to spike again.

Last week we saw UK economic growth increase slightly – show relief for UK policymakers moving forward. This morning, we have seen average earnings also improve slightly, to a total of 6% – contributing to more disposable income for households. While we did see earnings reports improve, the UK unemployment rate came in at a similar level as previous month and better than forecasted. Three economic indicators for the UK on the right path, has seen GBP improve against the EUR, moving into the mid-market level of 1.20. The unemployment rate not rising, is a good sign for the UK – since the golden quarter (Oct-Dec) showed poor performances for the UK and there were fears of big layoffs.

In the afternoon we move onto core inflation and inflation levels for Canada. Canada being in the firing line recently, with tariff threats from the US and Donald Trump, have seen the Canadian dollar under immense pressure and caused volatility to CAD-pairs. Expectations for Canadian inflation levels is expected to see a raise from 1.8% to 1.9%, still below its target rate of 2%. Recent monetary policy decisions from Bank of Canada, did see their interest rate levels cut by 25 basis points down to 3%. It’s too early to see the effects from its latest rate cut, but if inflation levels do come out higher this afternoon – it could cause BoC to halt upcoming meetings to not surge price levels further.

GBP/EUR 1.2046 GBP/USD 1.2598 GBP/AED 4.6298
GBP/AUD 1.9823 GBP/CHF 1.1347 GBP/CAD 1.7884
GBP/NZD 2.2080 EUR/USD 1.0447 GBP/ZAR 23.2297

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