GBP/AUD Outlook: Slightly weaker, but likely to move sideways, as the rate is below its recent average and positioned mid-range without a clear driver.
Key drivers:
• Rate gap: The Bank of England's cautious approach to rate cuts contrasts with potential rate hikes hinted by the Reserve Bank of Australia, impacting GBP negatively.
• Risk/commodities: The Australian dollar is benefiting from stronger Chinese economic data, increasing demand for Australia's exports and supporting the AUD.
• One macro factor: The possibility of US tariffs impacting the UK economy adds pressure on the GBP, further complicating its performance.
Range: GBP/AUD is expected to drift within its recent range, as current pressures keep the exchange rate steady.
What could change it:
• Upside risk: A potential shift in US tariff strategies could improve GBP strength against AUD.
• Downside risk: Weaker-than-expected UK jobs or GDP figures may further dampen demand for GBP.
