The problem with experience is that we have seen pairs like GBP/AUD at much higher levels (twice as high as currently) and yet we are faced with little option but to be bearish based on central bank activity The BOE is easing policy and may indeed start fine-tuning later today with another GBP25 billion stimulus, whilst the RBA is sending signals that it’s rate-cutting cycle may be coming to an end. This is of course sending the GBP in one direction and the AUD in the other.
In 2002 we were trading close to 3.0000 and now we are looking to re-test historic lows near 1.4585. I just can’t get bearish at these levels. I’d rather wait and see if support levels hold and then jump on for a contrarian play.