GBP/AUD to slide below 1.78 – Westpac
|GBP/AUD is trading near daily lows around 1.80 and economists at Westpac expect the pair to slip below the 1.78 mark though some strength is expected in the short-term due to the aussie underperform on equity pullbacks.
Key quotes
“The consensus forecast is for Australian GDP to contract -4% over 2020, versus -8.5% in the UK. Both the RBA and BoE are pursuing very expansionary monetary policy (BoE somewhat looser) and fiscal support is substantial. In Q2, Australia’s fiscal boost was larger than the UK’s but the UK is planning fresh support as Australia looks to trim its spending.”
“Australia’s C/A position (surplus) is much more supportive than the UK’s (deficit), helping AUD against GBP. Potential wobbles over Brexit negotiations also open up risks for GBP/AUD to slip below our 1.78-1.79 end-Sep baseline.”
“Nearer-term, however, the Aussie looks quite stretched and is pricing in quite an upbeat equity outlook. AUD is likely to keep underperforming on any equity pullbacks, which could extend as far as GBP/AUD 1.8450-1.8520. This would be an attractive area to sell on a multiweek/month outlook.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.