AUD/GBP Outlook: Slightly positive, but likely to move sideways, as the rate is above its recent average without a clear driver.
Key drivers:
- Rate gap: The Reserve Bank of Australia has indicated potential interest rate hikes, contrasting with the Bank of England's cautious stance on cuts, supporting the AUD.
- Risk/commodities: The Australian dollar remains buoyed by high metals prices, while the GBP struggles amidst fears of a recession due to potential US tariffs affecting UK trade.
- One macro factor: The UK's projected slow GDP growth and stagnant household incomes further weigh on the GBP’s outlook.
Range: The AUD/GBP is likely to drift within its recent range, given stable market conditions.
What could change it:
- Upside risk: Stronger-than-expected economic data from Australia could bolster AUD further.
- Downside risk: Increased geopolitical tensions or further US tariffs could negatively impact the GBP, pushing AUD/GBP lower.
