Westpac forecasting further strength for the pound sterling against the Australian dollar in coming months

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Category: Australian Dollar News

Written by Sam Coventry

International Money Transfers at our sister site

For those with an eye on the GBP-AUD exchange rate, one analyst is forecasting gains ahead.

The pound to Australian dollar exchange rate is currently 0.51 pct higher on a day to day basis. If this is the kind of directional news you are looking for we have some potentially good news.

A morning currency note out of Westpac Institutional Bank has forecast further gains for the UK currency against its Aussie counterpart.

The news comes after what have been a particularly trying three months for GBP - August saw the rate below the crucial 1.5 level.


By historical standards the GBP-AUD rate is in undervalued, since the 1983 flotation of the Australian currency GBP-AUD has averaged 2.16.

It has been below 1.54 for a mere 5.4 pct of the time.

However, "there is no reason to expect the pair to approach its long run average even within the next couple of years but near term GBP/AUD should be somewhat less beaten down," says Sean Callow at Westpac Institutional Bank.

Callow says that as the Australia-UK 'growth gap' (relative performance difference) narrows a little, "GBP/AUD should press higher in coming weeks, with 1.5270 then 1.5400 achievable retracements of the June-July slide."

From a technical perspective, the 200 day moving average of 1.5275 is an obvious near term target, as is the 100dma at 1.5442.

Speculators could also show a little more appetite for sterling.

Calllow notes that "IMM non-commercial accounts have shown little interest in GBP in recent months, sitting
about flat this month. Speculator positioning is potential support for GBP/AUD."