Listen to the latest market mood for the GBPAUD pair.
The AUD is likely to remain stronger medium term as Australia’s economy opens up from COVID19 lockdowns. Australia has a headstart, alongside New Zealand, in opening up its economy due to an early containment of COVID 19 cases compared to global levels.
The GBP in contrast is the fourth most infected country in the world and has the second highest death toll at over 32,000 deaths. Furthermore, the UK still has another medium term drag on its economy with the EU-UK trade agreement still to be finalised. This will weigh on the GBP going forward because as soon as COVID19 concerns fade, if indeed they do, then EU-UK trade concerns will once again remain at the forefront.
- Therefore, we expect GBPAUD sellers on pullbacks to 1.9600.
- We expect this outlook to play out over the next 6-8 weeks.
The main risks to this outlook:
- Any strong pick up in COVID19 cases in Australia will negate this outlook.
- Any positive news that the EU-UK trade deal is getting closer to being done by year end.