GBP/AUD Outlook:
GBP/AUD is slightly weaker but likely to move sideways, trading near its 3-month low and 3.4% below its recent average. Without strong directional drivers, the currency pair is expected to drift within its recent range.
Key drivers:
• Rate gap: The Bank of England maintains higher rates amid persistent inflation, while the Reserve Bank of Australia is likely to stay cautious amid mixed data.
• Risk/commodities: Oil prices are currently stable, which puts pressure on the AUD as global demand remains uncertain.
• One macro factor: The recent UK PMI data indicates mixed signals: persistent inflation trends conflict with job cuts in the services sector.
Range:
GBP/AUD is likely to test extremes within its recent 3-month range of 1.8899 to 2.0258.
What could change it:
• Upside risk: Stronger-than-expected trade figures from Australia could boost the AUD.
• Downside risk: Weak UK economic indicators could further weaken the GBP.