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GBP supported by surprising retail sales

Sterling had been sliding in value for most of Monday but it sparked back into life overnight after the British Retail Consortium published their sales monitor showing 4.1% growth in the year to November. That was well above expectation and three times as strong as the previous month. Sterling’s next challenge will be this morning’s release of the construction sector purchasing managers index, which forecasters believe will be less positive for the pound. The Pound starts Tuesday buying USD 1.2215 and EUR 1.1623 at the interbank level.

RBA meets expectations

The Reserve Bank of Australia delivered the expected 25 basis point interest rate hike this morning, bringing their base rate up to 3.1% for the first time since 2012. Most in the markets are expecting further rises from the RBA but most likely at a slower pace with larger gaps between the increases as the central bank tries to assess the impact of their previous hikes. The UK retail sales data mentioned above and some profit-taking on the Aussie dollar brought the GBPAUD rate up to AUD 1.8165 this morning. The full RBA statement will be released this afternoon and then we will get Australia’s economic growth data overnight tonight. The general expectation in the financial markets is that Australia’s GDP growth in the year to September will be up to 6.2% from just 3.6% in Q2. That, or anything better than that is highly likely to strengthen the Australian dollar. So risk-averse AUD buyers might consider today to be a window of opportunity

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