AUD/USD has been on the back foot since the middle of the month. Economists at Rabobank expect the aussie to struggle amid mounting tensions between Russia and Ukraine but improving Australian fundamentals could lift the pair to 0.74 by year-end.

Scope for AUD to outperform the GBP on a six-month view

“The USD is likely to remain on the front foot through the first half of this year as Fed tightening begins.” 

“The USD’s dominance in the global payments system suggests it is set to find additional support if the tensions regarding Ukraine worsen further. AUD/USD could struggle to make much headway in this environment particularly given its historical sensitivity to risk appetite.” 

“The improvement in Australia fundamentals suggests AUD/USD has to potential to finish the year moderately higher in the 0.74 area.” 

“We see scope for AUD to outperform the GBP on a six-month view. This is based on our estimate that the market has priced in too much policy tightening from the BoE.”

“Our six-month GBP/AUD forecast stands at 1.74.” 

This article was originally published by Fxstreet.com.Read the original article here.

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