The GBP to AUD exchange rate has seen a recent rally fizzle out and prices could head lower from here. A rally in the pound started against the Aussie on July 22nd at 1.7695 and has seen a double top capping gains at 1.8410.
The UK economy is currently a mixed bag with disappointing retail numbers this week, but we also saw analysts talking about a record GDP growth for the country in Q3 after shoppers returned to the high street with the lifting of the national lockdown.
GBPAUD traders will get an opportunity to hear the thoughts of Bank of England Chief Economist Andy Haldane, who will be speaking in the afternoon. Haldane was previously upbeat about the UK economy, however, it is not out of the woods from the recent turmoil and there are fears for the jobs market when the furlough program ends in October. BoE governor Andrew Bailey talks on Friday and there is the RBA rate decision next Tuesday, so there is plenty of market-moving information coming for the GBP to AUD pair in the next week.
Analysts at Westpac bank have been bullish about China this week and are predicting strong demand for iron ore into 2021. Production and steel prices are rising in China’s rebound and this is good news for Australia’s top commodity export.
Westpac expects China’s economy to grow 15% this year from the low point in March and this would be an impressive bounce back for the country which saw the first virus outbreaks and lockdowns. Demand from China should continue to support the aussie against the pound as the UK’s own customer base will be hit harder from the economic fallout and trade could also be hampered by a souring of Brexit talks.
The GBPAUD rally saw a double top emerge last week and this has capped gains at 1.8400 in the pair. This pattern should see further lows emerge and bearish traders will be eyeing the support at 1.8160. If that level gives way then the aussie could retest the lows at 1.7700 in the weeks ahead. Getting back above 1.8300 would suggest another test of 1.8400.
