Sean Callow, analyst at Westpac, points out that AUD has printed 6 month highs against the pound this week even as markets continue to price in further RBA rate cuts to follow up on the June and July moves.

Key Quotes

“The rebound in Australia’s commodity price basket from mid-June lows has reinforced official data showing Australia is recording record trade surpluses despite the ongoing angst over US-China trade tensions.”

“This has shrunk Australia’s current account deficit to near balance, its strongest position since the mid-1970s and in stark contrast to the UK, whose C/A deficit of -5.6%/GDP the BoE drily notes is “large by international standards.”

“Such a backdrop, supported by equity market gains and low volatility, may be encouraging AUD short-covering despite the Australian economy’s sluggish domestic growth and inflation pulse which leaves the door open to another rate cut in coming months.”

“But the steepest GBP decline in recent weeks came after BoE governor Carney took a notably dovish turn, showing particular concern over protectionism. Meanwhile, the seemingly imminent selection of Brexit hardliner Boris Johnson as UK PM reinforces underlying GBP pessimism.”

“We look for further sterling underperformance multi-week to around AUD/GBP 0.5675/0.5700 or GBP/AUD 1.7550/1.7625. Multi-month though, AUD should soften on a range of crosses, including against the pound, so the next few weeks could be its strongest levels for 2019.”

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.

Feed news

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!

Latest Forex News

Editors’ Picks

USD/JPY keeps loses below 107.50 amid upbeat Japan data dump, risk-off

USD/JPY keeps the red below 107.50, as the yen remains well bid amid US-China tensions and upbeat Japanese data dump. The Asian stocks and S&P 500 futures flash red. Focus shifts to the US data and President Trump's response to the Hong Kong issue. 


AUD/USD: Choppy within range below 0.6650 amid US-China risks

AUD/USD remains depressed around 0.6640 so far this Friday. Risk-tone remains heavy as global equities are weighed down by escalating US-China tensions over the Hong Kong security issue, with all eyes now on Trump's presser. 


Eurozone Inflation Preview: A sub-zero rate may be insufficient to down the euro

Preliminary eurozone CPI data for May will likely show depressed inflation. Without shocking figures, the EUR/USD has room to rise, in the opinion of FXStreet’s analyst Yohay Elam.Key quotes: “Petrol will likely put pressure on CPI."

Read more

Gold picks up a bid amid losses in the US stock futures

Gold, a traditional safe-haven asset, is drawing bids as the US stock futures are signaling risk aversion. China imposed the controversial national security bill on Hong Kong on Thursday. Markets fear the US would retaliate with sanctions on China.

Gold News

WTI eyes record monthly surge

While West Texas Intermediate (WTI) crude's front-month contract has backed off from the 2.5-month highs reached earlier this week due to deteriorating US-China tensions, it is still on track to post its biggest monthly gain on record. 

Oil News