AUD/GBP Outlook: Slightly positive, but likely to move sideways as the rate remains above its recent average with no clear driver pushing it higher.
Key drivers:
• Rate gap: The Reserve Bank of Australia's potential interest rate hike may attract investors compared to the Bank of England's expected rate cuts.
• Risk/commodities: A decline in commodity prices, particularly in precious metals, has impacted the Australian dollar, but its overall strength remains due to current inflationary pressures.
• One macro factor: The RBA is signaling tighter policy due to rising inflation, which could support the AUD.
Range: AUD/GBP is likely to drift within its recent 3-month range as the lack of strong current drivers prevents significant movement in either direction.
What could change it:
• Upside risk: A stronger-than-expected manufacturing PMI from China could boost demand for the AUD.
• Downside risk: If the Bank of England offers more hawkish guidance, it may strengthen the GBP against the AUD.