25 Feb 2015
GBP/AUD headed towards 2.02/04 - Westpac
FXStreet (Bali) - AUD should extend its two-year decline versus the pound to GBP/AUD 2.02/2.04 in coming weeks, notes Sean Callow, FX Strategist at Westpac.
Key Quotes
"AUD should extend its two-year decline versus the pound to GBP/AUD 2.02/2.04 in coming weeks as the Bank of England keeps alive talk of higher rates while AUD struggles for traction against the backdrop of the RBA’s easing bias and commodity prices yet to form a base."
BoE tightening is probably distant enough to limit the AUD decline beyond AUD/GBP 0.4900 or GBP/AUD 2.04 any time soon. AUD is also arguably close to fair value after its steep 2013-2014 decline. But AUD has no real prospect of sustained gains against GBP so long as the Australian economy is soft enough to keep markets leaning towards RBA cuts.
Key Quotes
"AUD should extend its two-year decline versus the pound to GBP/AUD 2.02/2.04 in coming weeks as the Bank of England keeps alive talk of higher rates while AUD struggles for traction against the backdrop of the RBA’s easing bias and commodity prices yet to form a base."
BoE tightening is probably distant enough to limit the AUD decline beyond AUD/GBP 0.4900 or GBP/AUD 2.04 any time soon. AUD is also arguably close to fair value after its steep 2013-2014 decline. But AUD has no real prospect of sustained gains against GBP so long as the Australian economy is soft enough to keep markets leaning towards RBA cuts.