GBP/AUD Outlook: Bearish, as the rate is notably below its recent average and positioned near recent lows, affected by economic pressures in the UK.
Key drivers:
• Rate gap: The Bank of England has indicated a cautious approach to rate cuts, while the Reserve Bank of Australia is preparing for potential interest rate hikes, widening the gap between the two currencies.
• Risk/commodities: Strong economic data has propelled the Australian dollar to recent highs, while any renewed geopolitical tensions could support it further.
• One macro factor: Ongoing trade tensions and tariffs threaten UK economic growth, further pressuring the pound's value.
Range: GBP/AUD is likely to drift within its stable range, potentially testing recent lows.
What could change it:
• Upside risk: A significant improvement in UK economic indicators could boost GBP.
• Downside risk: Escalation of US tariffs on UK goods could further weaken the pound.
