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The British Pound's 2021 uptrend against the Australian Dollar remains intact with an under-pressure UK currency picking up support at a critical support level in the previous week.
The Pound endured widespread selling during the first week of April as investors cleared out bullish positions on the currency, leading to declines in the Pound-to-Australian Dollar exchange rate from 1.82 back to 1.7933.
The declines were however met with fresh buying interest on Friday and again this Monday, allowing GBP/AUD to reaffirm a rising uptrend pattern:
As can be seen in the above, a supportive rising trend-line is located at a series of lows formed in the broader rise of GBP/AUD.
If recent price action confirms the 2021 uptrend is indeed intact then GBP/AUD can engage in a recovery pattern over coming days, although a test of fresh 2021 highs remains unlikely this week and could be a prospect over a multi-week timeframe.
Despite the losses, foreign exchange analysts at Australia-based international financial services provider Westpac says the UK currency's weakness is likely to remain short-lived in duration.
"GBP declines should be short-lived," says Imre Speizer at Westpac in Auckland.
The Pound starts the new week smarting from a bout of hefty selling pressures at the start of April that saw it record declines against all the major currencies: GBP/AUD fell from a weekly open at 1.8179 to close at 1.7999.
The pair is at 1.8040 at the time of writing.
GBP/AUD Forecasts 2021
Period: Q2 2021 Onwards
FX for Businesses Guide
Meanwhile Westpac tell clients a resurgence in broader Australian Dollar strength is unlikely to arrive before the third quarter of the year, a forecast which if correct will allow GBP/AUD to find some upside.
"AUD/USD price action remains consistent with our view that while broadly range-bound for now, the Aussie is more of a buy on dips than a sell on rallies," says Sean Callow, a foreign exchange strategist at Westpac.
Westpac maintain a view that equity market performance still matters for the Australian Dollar, therefore a rally in global stock markets will be supportive of further upside.
But, Callow warns of a chance that Australia is heading into a period of softer Australian data in the wake of the expiration of the JobKeeper programme.
"The Aussie should continue to find support on dips to the mid-0.75s, but is likely capped for now in the 0.7700 area. A return to the 0.80 handle may have to wait until Q3," says Callow.