Bias: range-bound, current GBP/AUD is below the 90-day average and in the lower half of the 3-month range, implying only a limited near-term drift.
Key drivers:
- Rate gap: BoE signals a slower pace of rate cuts this year while the RBA remains open to hikes, narrowing the policy gap and skewing FX moves toward the Australian side.
- Risk/commodities: Oil and broader commodity demand stay volatile, a dynamic that tends to lift the AUD when demand improves and pressure the pound otherwise.
- Macro factor: China inflation dynamics and its recovery path influence Australian exports and long-run demand for the AUD.
Range: GBP/AUD is likely to drift within the 3-month range, with a mild tilt toward the lower end as traders await fresh UK and Australian data.
What could change it:
- Upside risk: BoE cues a slower pace of cuts or hints at higher policy rates than currently anticipated.
- Downside risk: stronger Australian data or a clearer RBA tightening stance lifting the AUD and weighing on the pound.