GBPAUD: Pound under pressure short term - Westpac

Sean Callow, Research Analyst at Westpac, suggests that the slide in AUD against GBP from late April to late May reflected both the RBA rate cut and a reduced risk premium on sterling as polls looked more promising for the UK to vote to stay in the EU at the 23 June referendum.

Key Quotes

“However, recent polls suggest it was premature to price out “Brexit”. We expect the pound to underperform major currencies ahead of 23 June, helping AUD/GBP extend the recent move to 0.52, GBP/AUD to 1.92. A lack of urgency at the RBA for another rate cut and steadying commodity prices should also help AUD over the next month or so.

After 23 June, the “stay” vote we expect should produce a relief rally in the pound, though not as far as late May levels.”