AUD/GBP Outlook:
The Australian dollar (AUD) is currently strong against the British pound (GBP), trading above its recent average and close to recent highs. This strength is largely driven by expectations of further rate increases from the Reserve Bank of Australia.
Key drivers:
• Rate gap: The Reserve Bank of Australia’s cautious outlook contrasts with the Bank of England's potential for interest rate cuts due to rising unemployment in the UK.
• Risk/commodities: The rising demand for Australian commodities, especially from China, continues to support the AUD’s value.
• Macroeconomic factor: Persistent inflation in Australia raises the likelihood of further interest rate hikes, providing additional support for the AUD.
Range:
The AUD/GBP is likely to drift within its recent range, showing potential to test recent highs as external conditions remain favorable.
What could change it:
• Upside risk: A stronger-than-expected Australian jobs report could fuel further AUD gains.
• Downside risk: A significant drop in oil prices may negatively impact the resource-linked AUD.