Should the RBA cut interest rates next week I would expect GBP/AUD to move towards 1.52 but EUR/AUD could move back to 1.25

Sterling has once again breached the 1.50 level against the Australian Dollar creating some good opportunities for those looking to buy AUD. We have also seen the Euro rally past 1.27 back from the mid 1.25s earlier this week. For me we are likely to see further opportunities for GBP/AUD, particularly should the Reserve Bank of Australia look to cut interest rates on Tuesday next week. As for EUR/AUD the recent gains could be a stronger opportunity. The European Central Bank will meet tomorrow to discuss their latest interest rate decision with many expect the ECB to cut rates from 0.75% to 0.5%. This will have been priced into the market but I would still expect moves against the Euro to be negative as we finish off the trading week.

Longer term I believe buyers of the Australian Dollar will get stronger opportunities and would expect a shift towards 1.52 for GBP/AUD and would certainly adopt a wait and see approach. I feel the slowing economy in China and the recent strength of the dollar will cause concern for the RBA and I would not be surprised to see a couple of interest rate cuts throughout the year, with opportunities towards 1.55 later this year.

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