By Rob Samson

We hear from one analyst who warns that the chances of a drop in the pound sterling / Australian dollar exchange rate (AUD) is highly likely today.

The British pound (GBP) is showing strength across the foreign exchange markets today with broad-based buying pressure holding the entire exchange rate complex higher.

The move higher comes despite the commodity currency bloc being lifted in the last session with the AUD leading the way driving the rate below 1.85.

A look at the latest Aus dollar rates shows:

"Some of these gains have already been reversed and UK mortgage data has helped trading to return to levels around 1.85. The battle for sterling today will be sustaining these levels especially as there is some concern that UK growth is slowing. We expect some trading around the 1.85 level," says Sasha Nugent at Caxton FX.

Watch out for a fall in the pound sterling vs Aus dollar rate

We hear from trader Shaun Lee at FXWW on the possibility of a decline in GBP/AUD from current levels:

"Market is overall short of AUD and there will be heavy stops above .9100 in AUD/USD, while it is long of GBP and expecting some big buy flows today at the London Fix.

"What if the M&A flows don’t eventuate as expected and the AUD shorts keep getting squeezed?

"Could be a chance for a 24/48 hour play here in GBP/AUD. Edge into a short position looking for a 200 mpip move lower later today to test 182.00? Look for short-term resistance levels near 184.70 to cap any intraday rallies."

Australian dollar records heavy losses

mong the G10 currencies, AUD recorded the heaviest losses against USD overnight.

Once again, news out of China didn’t do good to the Aussie-complex.

This time, it was about the weaker Yuan than fixing for the first time since September 2012 on aggressive USDCNH and USDCNY purchases on PBOC request.

The PBOC plans to widen the Yuan’s trading band and does no longer want to give speculators the opportunity in one-way bets.

"In fact the sturdy decline in USDCNY and USDCNH naturally attracted one-way speculators, and now that the Yuan is believed to be no longer significantly undervalued, there is need to taper one-way specs. Especially while planning to widen Yuan’s trade band," notes Ipek Ozkardeskaya at Swissquote Bank.

After having recovered to 0.9049 in New York, AUDUSD gave back gains to 0.9015 in Sydney, then to 0.9004 a little after European opening.

"Technically, yesterday’s pick-up improved the technical indicators, however, the weakness in iron ore prices (first future contract trading at $848 today) and unsupportive news from China keep the upside limited at this stage. The resistance remains solid at 0.9080 / 0.9100 (Fibonacci 38.2% on Oct’13 – Jan’14 drop / optionality). The option bets are mixed at about 0.9000, with slight bias on the upside. Buying interest remains at 0.8907/0.8919 (50-dma / fibo 76.4%)," says the Swissquote analyst.