The GBP/AUD pair have remained range-bound for some time now, although there does appear to be a bias towards the downside as we’re seeing the Pound weaken on almost a daily basis at the moment.
With the Reserve Bank of Australia beginning to adopt a more bullish attitude the probability of another interest rate cut from them again this year has dropped down to 30% according to major bank Danske Bank. This coupled with the Bank of England’s likelihood of cutting rates once again in the UK is why I feel there is potential for further falls for GBP/AUD.
Aside from the UK’s and Australia’s own monetary policy plans, the GBP/AUD exchange rate’s direction is currently also being influenced by the US Fed Reserve Banks monetary policy plans.
It’s likely that when interest rates are increased in the US, the Pound will gain on the Aussie as at the moment the Australian Dollar has been benefiting as many investors worldwide wish to hold funds in AUD due to the high interest rates offered by Aussie banks.
Once rates increase in the US I’m expecting the Pound to gain value on the AUD, as deposits will likely switch from AUD to USD which will weaken the Aussie.
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