The GBP/AUD breakout follows a Reserve Bank of Australia rate hike paired with a signal of a prolonged pause, draining support from the Aussie.
Fawad Razaqzada, StoneX Media Market Analyst, explains why sterling is outperforming the Australian dollar and what UK GDP data means for the pair.
The British pound has slipped against the U.S. dollar after hotter-than-expected U.S. CPI inflation lifted the greenback across the board, yet sterling has held up relatively well against other major currencies on sticky UK inflation and a hawkish Bank of England. A UK GDP reading in line with or stronger than expectations would reinforce the view that the UK economy remains resilient and give the Bank of England little reason to push back against market expectations of rate hikes. The Australian dollar faces pressure from a weakening domestic economy and softer demand from China, Australia's largest trading partner. On the charts, GBP/AUD has moved above its 200-day moving average and 21-day exponential moving average and cleared a resistance zone that capped several rallies earlier in the year, with recent consolidation resembling a bullish flag.
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