GBP/AUD Outlook:
GBP/AUD is likely to decrease as it trades 3.9% below its recent average and is currently near recent lows. Political uncertainty in the UK and cautious remarks from the Bank of England may pressure the pound.
Key drivers:
• Rate gap: The Bank of England's dovish stance contrasts with the Reserve Bank of Australia's potential for further rate hikes, impacting GBP negatively.
• Risk/commodities: The Australian dollar has gained amid speculation of a rate hike, while geopolitical tensions are causing a shift to safer assets, affecting the pound.
• One macro factor: Weakness in China’s manufacturing due to Lunar New Year celebrations could lead to a dropping AUD if growth contractions occur.
Range:
GBP/AUD is expected to drift within its recent trading range, potentially testing lower extremes.
What could change it:
• Upside risk: A shift in UK political stability could bolster the pound.
• Downside risk: A negative manufacturing PMI from China could weaken AUD further, impacting the exchange rate.