Risks are tilted to the downside, with the AUD/GBP pair likely probing 0.5350/60 as the aussie underperforms the G10 on US election uncertainty and positioning ahead of the Reserve Bank of Australia meeting on November 3, as per Westpac.
Key quotes
“Our baseline scenario over Q4 is for both AUD and GBP to trend higher against the US dollar, with our year-end forecast at 0.57. But short-term risks look to be to the downside, likely probing 0.5350/60 as the aussie underperforms the G10 on US election uncertainty and the RBA’s increasingly dovish stance, setting up fresh monetary easing on November 3.”
“The latest headlines on UK-EU trade negotiations are more encouraging, with hopes rising that an agreement will be reached to provide UK exporters greater access than the no-deal scenario.
However, downside should be limited during November by the BoE’s own easing steps, with potential for expanded bond purchases.”
“In the US election, a Democratic ‘Blue Wave’ win would most likely support AUD/GBP as equities rally on the prospect of looser fiscal policy.”
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