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Flash: AUD/GBP probably has enough bad AUD news priced in near term – West Pac

FXstreet.com (Barcelona) - The AUD/GBP has been in steep downtrend over the past 6 weeks, losing just over 400 pips and currently sitting at 0.6414 and some analysts believe there are a number of reasons the pair is now due for a short term bounce.

According to Sean Callow at Westpac, “after a 5 cent fall since early April, AUD/GBP probably has enough bad AUD news priced in near term, suggesting risks towards 0.6550/75. AUD sentiment is likely to be the key swing variable in coming weeks and months, with the UK economy grinding out no better than modest growth and incoming BoE governor Carney not likely to rush to chang policy in July. AUD/GBP could face some resistance on a bounce at the 200 day average, currently 0.6580. Obvious support should lie just under 0.6400, which found buyers in both Jan and May, then around 0.63, which proved bouncy in Oct 2012.”

He went on to add, “AUD/GBP remains in historically elevated but not extreme territory, with trade above 0.60 accounting for almost 14% of days since the 1983 AUD float. Given Australia‟s still historically high terms of trade and the BoE running ultra loose policy, there is no reason to expect the pair to approach its long run average of 0.4665even on say a 2-3 year horizon”

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