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Consumer prices in the U.K. just rose to their fastest rate in 40 years!

Will the report bust GBP/AUD out of its months-long range?

Before moving on, ICYMI, yesterday’s watchlist looked at a possible Double Top breakdown on CAD/CHF ahead of Canada’s retail sales release. Be sure to check out if it’s still a valid play!

And now for the headlines that rocked the markets in the last trading sessions:

Fresh Market Headlines & Economic Data:

Canada headline retail sales higher from 0.2% to 0.9% in April

US home prices top $400,000 for first time, crimping May sales

NZ trade surplus lower from 440M NZD to 263M NZD in May

BOJ minutes: members debated weak yen, warned of harm from excess moves

Dollar gains on growth fears ahead of Fed chair’s remarks

Asian stock rally fizzles on revived inflation fears

U.K. inflation rises to fresh 40-year peak of 9.1% as cost of living crisis worsens

U.K. factory gate prices accelerated from 14.7% to 15.7% y/y in May

Upcoming Potential Catalysts on the Forex Economic Calendar:

Canada’s inflation reports at 12:30 pm GMT
Fed’s Powell to testify before the Senate Banking Committee at 1:30 pm GMT
Eurozone’s consumer confidence at 2:00 pm GMT
U.S. President Biden to give a speech about gas prices at 6:00 pm GMT
AU flash manufacturing and services PMIs at 11:00 pm GMT
Japan’s flash manufacturing PMI at 12:30 am GMT (June 23)

Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️

What to Watch: GBP/AUD

GBP/AUD 4-hour Forex Chart

GBP/AUD 4-hour Forex Chart

Earlier today, we found out that consumer price increases in the U.K. accelerated from 9.0% to a 40-year high in 9.1%. That means prices haven’t risen this quickly since Diet Coke made its debut on grocery shelves!

The added pressure on the Bank of England (BOE) to tighten its policies further boosted GBP against some of its counterparts including AUD which had taken hits on China’s (and global) growth concerns.

GBP/AUD has rocketed from the 1.7600 area and is now trading closer to the 1.7800 psychological handle that marks the top of an unbroken range resistance on the 4-hour time frame.

How long will the party last for GBP bulls?

Remember that BOE would prefer fewer tightening changes as economic reports point to the U.K. being in danger of a recession. With inflation as high as it is, BOE members will have to tighten further in their next meetings.

Luckily for GBP bulls, it looks like global growth concerns are trumping U.K. recession risks…for now.

Let’s see if European or U.S. traders feel like taking more risks than their Asian counterparts.

I’ll be looking at how GBP/AUD closes its next candlesticks to see if the tides change in favor of GBP bears once GBP/AUD approaches the range resistance.