Pound-Australian Dollar to Continue Its March Lower This Week
- Written by: Gary Howes
Image © Adobe Stock
The pound-Australian dollar exchange rate is firmly locked onto 1.87, a level it should hit by at least mid-May, if not sooner.
We can be quite confident in this prediction simply because GBP/AUD is falling at a steady and, dare I say, predictable pace.
It's well behaved from a chartist perspective: The daily chart is composed of descending trendlines that the exchange rate is respecting and unable to break above.
The inability to break above the trendline ultimately condemns GBP/AUD to a steady run of lower lows.
On April 17 we saw a low of 1.8808, from where the pair subsequently consolidated. However, Monday's 0.36% drop threatens to end that consolidation and introduce us to fresh lows.
The drop coincides with the nearing downtrend line, confirming the downtrend is intact.
From here, 1.87 is in prospect and an eventual move to brand new multi-year lows.
Compare GBP to AUD Exchange Rates
Find out how much you could save on your pound to Australian dollar transfer
Potential saving vs high street banks:
A$4,875.00
Free • No obligation • Takes 2 minutes
Driving GBP/AUD weakness is a generalised air of positivity on Monday. Sure, there were no real headlines out of the Middle East to drive the gains in stocks and commodity currencies (such as the Aussie), but there were no real negative headlines either.
And for a market that tends to look on the brighter side, that's a good thing.
"Expectations of an imminent de-escalation in the Middle East have supported the S&P 500’s sharp rebound from its March 30 low. Investor confidence has improved alongside earnings momentum, as the energy shock has not led to material downward revisions," says Magdalena Ocampo, Market Strategist, Principal Asset Management.
It will nevertheless be a busy week: behind-the-scenes talks between the U.S. and Iran will continue to offer hope that progress towards a deal continues, and that will support the AUD. Of course, expect news of setbacks to stir the pot and offer fleeting bounces in GBP/AUD.
Don't let the rate decide.
You decide.
On top of the war, there are earnings and central bank decisions to stay on top of.
"Today’s quiet calendar feels like the calm before the storm. Five central banks, including the Fed and the ECB, will meet this week, starting with the BoJ tomorrow, while Alphabet, Microsoft, Amazon, Meta and Apple will announce their results on Wednesday and Thursday," says Achilleas Georgolopoulos, Senior Market Analyst at Trading Point.
All these calendar events should impinge on risk sentiment, which will trigger moves in the high-beta Aussie dollar: good news = Aussie dollar gains, disappointment = Aussie dollar setbacks.
"The S&P 500 has rebounded sharply from its March 30 low, erasing the losses triggered by the Iran conflict. Ceasefires and renewed negotiations have helped restore investor confidence that tensions will ultimately be resolved. At first glance, record-high equities alongside oil near $100 may feel counterintuitive, but both are consistent with a resilient earnings backdrop and a Q1 reporting season that has begun on a strong footing," says Ocampo.
Concierge Money Transfers
For high-value transfers, you need high-value service: dedicated account management, on-point pricing, insight into market conditions and trends, help with structuring your payment, and execution support at key moments.
Learn More →
