GBP/AUD seen at 2.18 in three months – UBS

By FXStreet FXStreet (Córdoba) – UBS team are opening a short-term opportunistic trade recommendation to be long GBP versus short the AUD at the current spot of 2.05. This trade has the same target as their three-month forecast of GBPAUD 2.18. The stop-loss is at 1.99. “The GBP/AUD has fallen rapidly from a high of 2.23 in mid-2016 to as low as 2.00 last week, before consolidating at current levels. We expect most of this fall to be reversed”, said UBS.

Key Quotes

“On the UK side, two main factors have weakened the currency in recent weeks. First, slightly weaker economic data and lower inflation expectations. Second, the EU Referendum and concerns around a possible BREXIT has come more into focus. As a result of this, market pricing for the first rate hike by the Bank of England has moved into the second half of 2017. This is in our view an overreaction”.

“The fundamental strength of the UK economy with, for example, the unemployment rate close to pre-crisis levels, points to tighter monetary policy sooner than markets currently think. There are likely to be some forecast revisions in tomorrow’s Bank of England Inflation Report, however, we expect some push-back against current market expectations …read more

Source:: FX Street