"Trade of the Week": Pound-to-Australian Dollar Rate Tipped to Head Back to 1.80

Foreign exchange strategists at RBC Capital Markets - the Canada-based international financial services provider and investment bank - are this week calling time on the Pound's rally against the Australian Dollar.

The Aussie Dollar was given a free pass by the Reserve Bank of Australia Tuesday when its ongoing recovery rally went unremarked upon in the August monetary policy update, with the bank instead taking a less pessimistic view on the economy. 

The Pound has risen for seven days in succession against the Australian Dollar, and the first full trading day of August sees a further advance underway which should underline the view that the recent rally was not merely just a month-end phenomenon.

The Pound is on course to end the week 1.0% higher against the Australian Dollar, which would make for a second consecutive weekly advance in the pair; the last time we saw back-to-back weekly advances as prior to the financial meltdown of March when the Aussie was in free-fall.

The Australian Dollar was swooning against the ropes Thursday as fundamental and technical headwinds conspired to undermine the AUD/USD rally while strategists at Societe Generale and Commerzbank advocated ditching the antipodean currency.

The Australian Dollar has now experienced five consecutive days of declines against the British Pound, and another sharp decline in value on Thursday could make for a sixth straight day of declines as the Aussie currency tracks global stock markets lower.

The Australian Dollar overlooked a climbing coronavirus toll and related disruption Wednesday as July's Federal Reserve (Fed) statement and rising precious metals offered the antipodean unit a glimpse of April 2019 highs. 

Having completed four successive days of gains, the Pound-Australian Dollar exchange rate is back above 1.80, a psychologically significant level it will look to hold in order to keep a short-term rebound alive.