Sterling forecasted to hit 1.7 against the AUS dollar

The Australian dollar (Currency:AUD) was hit hard yesterday with data on housing and comments by the boss of the central bank sending the currency lower.

Momentum remains against AUD today with expectations of an interest rate cut at the RBA weighing.

Richard Driver at Caxton FX says he is confident that the British pound could breach 1.7:

"It appears that the market is pretty much certain that the Reserve Bank of Australia will cut interest rates next week and that being the case, it is hard to see the central bank stopping there.

"GBP/AUD has rallied strongly this week and profit-taking is always a possibility but regardless, we shouldn’t have to wait too long before the 1.70 level is breached."

New Zealand dollar on the front foot

Meanwhile, the New Zealand dollar (Currency:NZD) remains firmly placed to defend itself, and even advance, against the British pound.

Driving the NZ dollar higher today is business confidence data which has hit a 14-month high.

Driver says he is backing GBP/NZD declines from here:

"A gauge of NZ business confidence soared to its highest level since April 1999 in July, which speaks volumes for the positive growth cycle which the NZ economy is enjoying at present.

"With the RBA poised to cut rates next week to 2.50%, the AUD will no longer boast a stronger interest rate – another bonus for the NZD. This pair is down at 1.9050 and we still prefer the NZD."