GBP/AUD Downide Risks to Persist in the Week Ahead
- Written by: Gary Howes
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GBP/AUD faces continued downside pressure as surging energy prices boost the Australian dollar.
Surging oil and gas prices are supporting the Aussie dollar at the start of a new week, with GBP/AUD risks tilted lower.
The British Pound drops against the Australian dollar on Monday as markets favour net energy exporters amidst an energy price surge.
Oil prices surged above $100 a barrel on Monday after weekend developments indicated there's no chance of an imminent restart of shuttered oil and gas exports from the Middle East.
European oil benchmarks surged a further 30% as seaborne exports of Qatari gas stay offline, pushing demand to those countries that can meet exports.
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That includes Australia, a major net energy exporter which exports roughly two-thirds of its total energy production, primarily in the form of liquefied natural gas (LNG), coal, and uranium.
It is one of the world's largest exporters of fossil fuels, with energy exports significantly exceeding domestic consumption, despite importing refined petroleum products
With AUD finding favour in this environment, GBP/AUD drops a third of a per cent on Monday to 1.9015.
Pound Sterling Live
With energy prices likely to stay elevated GBP/AUD can stay pressured, although we think the pair has managed to exit the clutches of the frantic selloff that has characterised recent weeks.
Sterling has stabilised against the Aussie over the course of the past two weeks, arresting a decline that saw ten successive weekly closes in the red.
Stability comes off 1.8860, which is an approximate area of multi-day support. Gains are finding selling interest up at approximately 1.9120, which could prove to be the limit of sterling's ambitions in the short term.
So while Monday starts with a GBP/AUD on offer, there's reason to believe that the exchange rate has exited the downtrend of previous weeks and losses will be contained above 1.8860.
