AUD/GBP Outlook:
The Australian dollar (AUD) is currently trading at 90-day highs, significantly above its recent average. This upward movement is supported by strong domestic economic data, maintaining a bullish outlook.
Key drivers:
• Rate gap: The Reserve Bank of Australia's potential for further monetary tightening contrasts with the Bank of England's looming rate cuts, favoring the AUD.
• Risk/commodities: Robust demand for Australian commodities, particularly amid China's economic recovery, bolsters the AUD against the GBP.
• Macro factor: Strong employment data in Australia reinforces expectations for continued economic expansion, providing additional support for the AUD.
Range:
Expect the AUD/GBP exchange rate to hold near its current high, with the potential to drift within a stable range over the coming weeks.
What could change it:
• Upside risk: A surprising acceleration in Australia's economic growth could further strengthen the AUD.
• Downside risk: If UK economic data, especially retail sales, significantly improves, it may enhance the GBP's position, impacting the AUD/GBP level.