Which direction is GBP/AUD likely to move in next? (Joseph Wright)

Pound Pushes Higher Against the Australian Dollar on Recent Economic Divergence

The GBP/AUD pairing have been trading precariously around the 1.60 level for a short while now, as the pair struggle to find a general upward or downward trend.

Whilst the Pound has clearly fallen heavily since the Brexit vote, and then lost another substantial amount of value around the beginning of this month after UK Prime Minister, Theresa May outlined a deadline for the invocation of Article 50 which will trigger the UK’s separation process from the EU, GBP/AUD seems to have found a floor around the 1.60 mark.

The pair have traded slightly above and below the 1.60 benchmark but personally I think the pair are now range-bound, but there are a number of events/factors which could create a stronger sense of direction.

It’s looking unlikely that the Reserve Bank of Australia (RBA) will cut interest rates further at their next opportunity after some better than expected inflation data released earlier this week, but the Bank of England (BoE) may be forced the cut the interest rates in the UK further as ignoring Sterling’s substantial drop is becoming difficult, as the governor of the BoE, Mark Carney announced earlier this week.

Also a little later this morning UK GDP Figures will be released which could swing exchange rates, with the expected figure 0.3% key as should the release sway from this Quarterly expectation I think the Pound could be in for a volatile morning.

The Aussie Dollar has been aided by the increasing coal and iron ore prices and I think that if the GBP/AUD pair break out of the current trading range they’re in, it will most likely be towards 1.50 as opposed to 1.70 as the ongoing effects weigh on the Pound.

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