Buy GBP/AUD - Westpac

Analysts at Westpac are suggesting to buy the GBP/AUD cross into retracement dips after its recent surge.

Key Quotes

“Entry: Buy 50% at 1.6880, further 50% at 1.6815, Stop: 1.6715, Target: 1.7200”

“Rationale: Broadly remains intact, but with caveats that the much of the anticipated break/move has already developed. Please note some changes to the below. 

• UK May’s calling a House of Commons vote for a snap General Election (June 8th) on the back of extremely positive poll support for the Conservative government will be seen as an opportunity to increase their slim majority and provide a clear Brexit-based mandate
• Providing political certainty and strength early in the Brexit negotiation period should be seen as positive in advance of the EU-27 Brexit Summit on 29th April
• Slippage in bulk prices and affirmation of a neutral RBA and its concerns over housing and household balance sheets should see AUD remain under pressure in week light on AU data
• Domestic attention in Australia will focus upon the 9th May Budget where Turnbull’s weak Government endeavours to bolster popular support whilst avoiding a ratings downgrade
• The break out of a tight range and above 200-day mov ave (1.6715) should provide a technical stop level (rather than previous support)
• Data risk to the trade lies in Friady's (not Thursday as in the previous note) UK Retail Sales data as weakness could signal a faltering of the key driver of UK’s solid post-Brexit-vote performance.”