GBP/AUD Downtrend Continues Amid RBA-BoE Policy Divergence

The British pound (GBP) has been experiencing a persistent downtrend against the Australian dollar (AUD), and on Monday, it continued to struggle. The pair's recent analysis suggests that they are right around a 13-year low due to several factors including monetary policy divergence between Australia and England.

The Reserve Bank of Australia (RBA) has been more hawkish, with its cash rate at around 4.35%, while the Bank of England is approximately 3.75% lower. This differential continues to be a major driver in this environment. Christopher Lewis, a technical analyst and market commentator, notes that he looks for yield in this scenario.

The commodity and energy exposure coming out of Australia also contributes to the weakness against the AUD, as does the favorable carry. According to Lewis, there is significant support near the 0.87 level and then again at the 0.8535 level. However, breaking through resistance levels above 1.88 would open up further questions about the trend.

The upcoming catalysts include a speech by Bank of England Governor Bailey on Tuesday, as well as Australian NAB business data and Westpac confidence numbers this week. Lewis remains bearish but is looking for value if it's offered on a bounce.