Pound To Australian Dollar Week-Ahead Forecast: AUD Volatile On Middle East Developments - Exchange Rates UK

What the desk is arguing

The desk believes that the AUD will experience heightened volatility against the GBP in the coming week, largely influenced by geopolitical developments in the Middle East. Per the full note source, this volatility is expected to stem from shifts in market sentiment as traders react to news and events in the region.

Recent data indicates that the AUD's correlation with commodity prices remains strong, particularly with oil, which has seen significant price movements. For instance, oil prices surged by approximately 5% last week, reflecting market concerns over supply disruptions, which could further impact the AUD's trajectory.

Where it sits in our coverage

Our consensus target for the GBP/AUD pair is set at 1.075, with a range between 1.04 and 1.12. Notable targets from other firms include: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26)

This view aligns closely with jpmorgan, which shares a similar bullish outlook on the AUD's potential recovery, while bofa presents a more cautious stance, suggesting a bearish outlook that sits at the lower end of the consensus range.

How other firms see it

Several firms, including jpmorgan and citi, are aligned in their bullish outlook on the AUD, anticipating a rebound as commodity prices stabilize. In contrast, bofa holds a contrary view, projecting further weakness for the AUD against the GBP, reflecting broader risk aversion in the market.

Traders should also keep an eye on the AUD/NZD pair, as movements there may provide additional context for the AUD's performance against the GBP. Furthermore, developments from the Reserve Bank of Australia (RBA) regarding interest rates could also influence this dynamic.

What the calendar says

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