Sterling’s broad-based rally resumed today following stronger-than-expected Q2 GDP data, with gains seen across most counterparts except Yen. While the upbeat figures support the currency in the near term, some economists remain skeptical about the durability of the momentum. Part of June’s strong rebound is viewed as a catch-up in activity after the UK and US reached a trade deal limiting tariffs to just 10%.
Still, with this week’s labor market data showing wage growth remaining elevated despite some slowing, there is little urgency for the BoE to accelerate beyond its current pace of one cut per quarter. The combination of solid data and a measured policy approach continues to provide Sterling with a favorable backdrop.
Technically, GBP/AUD is extending its rebound from 2.0420, with today’s break above 2.0743 confirming short-term bottoming. This also suggests the correction from 2.1643 high has completed after three waves down. Further gains are now in view towards 2.1034 resistance. Firm break there will likely pave the way for a retest and possible break of 2.1643 to resume the larger up trend.
