The GBPAUD currency pair can be considered one of the top trading pairs in the Forex market. The exchange rates of the pair are heavily influenced by the correlation between two major global economies: those of the United Kingdom and Australia.
AUD is considered to be a commodity currency because of the high impact the prices of gold, oil, and gas have on the Australian dollar. This dependency on commodities makes AUD a risk currency, however, and in the past years, the global economic slowdown and the decline of China’s growth have had a negative effect on the currency.
The behaviour of GBP/AUD in Forex
In general, we could say that for this specific pair, the market movements can be quite volatile characterized by rapid and sharp price fluctuations and frequent unpredictable behavior.
Nevertheless, this specific pair might also present great opportunities for experienced investors who want to move away from the major pairs (EUR/USD: The euro and the U.S. dollar; USD/JPY: The U.S. dollar and the Japanese yen; GBP/USD: The Great Britain pound and U.S. dollar, and EUR/GBP: the Euro and the Great Britain pound). At the same time, GBPAUD is considered a great diversification tool.
Predicting the movement of GBPAUD
Although the technical analysis of the pair is considered quite difficult to fully understand using traditional factors, we could say that paying attention to US macroeconomic indicators can give the investor insight on GBPAUD. This happens due to the fact that the US dollar is directly involved in the calculation of cross-rates.
At the same time, the two National currencies of the pair (GBP and AUD) react at different speeds to the release of the US economic indicators. It is precisely this difference that enables experienced investors to capitalise on this specific pair for diversification and profits.
Another aspect to consider for predicting the rates of the pair is the strong correlation the pair has with the chart of the EUR AUD. In the upcoming Brexit events, this correlation may force GBP/AUD to fall but the downtrend is not expected to last in the long-term. On the other hand, GBPAUD is observed to have a negative correlation with the chart of AUD USD.
Finally, it is worth noting that the pair is most active during the European and Pacific sessions, especially because major news of UK and Australia are published at those times.
To conclude
The GBPAUD pair is considered a solid pair with two stable currencies. Of course, things can change at any time, but for the most part, these two currencies appear to be solid. Many investors looking to diversify their portfolio choose to trade currency pairs such as the GBPAUD for the potential it may offer.
