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Forex Flash: GBP/AUD unlikely to retest January highs of 1.5400 – Westpac

FXstreet.com (Barcelona) - The GBP/AUD has been repeatedly rejected below 1.4500 and now looks set to test 1.5150 multi-week. However, “the early January highs near 1.5400 seem unlikely to be tested multi-month, as the UK economy continues to struggle and incoming BoE governor Carney is likely to be open to bold new monetary measures.” notes Sean Callow, an FX Strategist at Westpac.

Moreover, the GBP/AUD has broken above the 55-day moving average but remains well short of the 100-day and 200-day averages. In March and April the pair made three distinct attempts to break below the low 1.44s but faltered each time.

The GBP/AUD remains in historically very depressed territory, with trade below 1.67 accounting for less than 7% 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 2.1437 even on a 2-3 year horizon.

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