The Reserve bank of Australia decides to hold rates at bay

The Reserve bank of Australia decided to hold rates at bay, currently at a base level of 4.35%. No surprise as it was convincing percentages that there would be a non-event from RBA. In the talks after, we could hear a more dovish tone on interest rates levels moving forward into 2025 and there is now a possibility of a rate cut taking place in February. RBA has had a hawkish outlook throughout 2024 and not lowered their borrowing costs in the whole year. There change of tone has now seen markets moving out of the AUD, seeing its peers taking advantages – i.e. GBP/AUD is up 0.7% in today’s session.

Germany inflation levels back above the two percent mark, after services and food prices increased for the country. Seeing inflation levels move from 2% up to 2.2%. Interestingly it was not energy prices that forced inflation levels up, which might be of a concern for Germany – as we are moving into colder months, and this could be an additional factor pushing inflation levels up further. Germany are already facing head winds when it comes to economic growth and disposable income for households and with increasing price levels – potentially leading to further difficulties for Germany and more pressure on European Central Bank to lower interest rate levels.

Tomorrow we will see core inflation and inflation levels for the US – forecast is that core inflation is looking to be unchanged, while inflation levels are expected to increase slightly. Moving on to Thursday and ECB, who have their next interest rate decision this Thursday – we have seen markets this morning starting to act in anticipation ahead of it and EUR has taking small losses in the Tuesday morning session against both the GBP and USD.

GBP/EUR 1.2103 GBP/USD 1.2754 GBP/AED 4.6866
GBP/AUD 1.9940 GBP/CHF 1.1217 GBP/CAD 1.8080
GBP/NZD 2.1903 EUR/USD 1.0525 GBP/ZAR 22.7705

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