Short term interest rate markets are expecting the RBA to hike interest rates next Tuesday by 25bps. This is to counter the surge in Australian inflation. These expectations may lead to some AUD strength ahead of the RBA meeting and GBPAUD sellers.
This is because the BoE is in a different phase as they have had already been rising interest rates to contain surging inflation. However, the BoE will start to be concerned that growth is starting to slow. In particular the last UK retail sales print saw a big miss and that will be a worry for BoE policy makers. It may mean the BoE are more cautious about rising interest rates when they meet on Thursday. Furthermore, the UK’s exposure to Russian/Ukraine risk has bee weighing on the point.
This should mean the GBPAUD finds weakness ahead of the RBA and BoE meeting this week. Expect GBPAUD sellers and risk can be managed carefully against this trendline here.