As we move through a busy mid-week session we see the following action by GBP against the commodity dollars:

The pound to Australian dollar exchange rate (GBP/AUD) is 0.05 pct down on a day-to-day basis at 1.8128.The pound to NZ dollar rate (GBP/NZD) is 0.13 pct higher having reached 1.9960.The pound to Canadian dollar (GBP/CAD) is 0.10 pct higher at 1.8388.NB: All quotes here are from the wholesale market; your bank will charge a spread at their own disrection. An independent FX provider will seek to come as close to the market rate as possible, they are able to deliver up to 5% more currency in some instances. Please find out more.

Forecast for the pound against the Aus dollar

The GBP/AUD has, over recent weeks, softened. But - does this necessarily mean the outlook is outright negative?

According to analyst Shaun Osborne at TD Securities there, "is scant sign that the market really wants to press the issue and force a break lower, much as we suspected would be the case Two consecutive weekly “doji” candles reflect a high level of indecision in the market around a major support point."

Furthermore:

"Investors might soon conclude, in the sophisticated way that markets operate, that if it can’t go down it has to go up.

"We note very weak momentum readings here on the short, medium and longer-term studies; that is quite an unusual confluence—there is simply no directional bias evident from the oscillators on either the 6-hour, daily or weekly studies.

"We still think that a move below 1.80 should signal a little more weakness at least in the cross but the lack of directional intent here suggests the main, near-term risk is more sideways range trading around 1.81."

The agenda for GBP this week

The outlook for the sterling / Aussie dollar faces a couple of fundamental hurdles to bypass this week.

June/July labour market numbers and the BOE Inflation Report will dominate the agenda on Wednesday.

The events, "may keep investors on tenterhooks this week with risks of unevenness from the former while a thin veil of positivity have already been attached to the latter," says Emmanuel Ng at OCBC Bank.

Ng is bearish on the headline pound dollar rate, "at this juncture, we think the bias may remain southbound within a 1.6690-1.6900 range."

Expect losses here to feed into the GBP-AUD and other major GBP currency pairs.

Australian agenda

The Australian dollar continued its recovery against sterling on the back of more strong data out of China.

CPI data in June rose by 0.1% on a monthly basis and offset a drop in PPI of 0.9%.

"With data out of China currently impacting Australian markets more than any domestic data, we expect it to be a another volatile week, especially with the release of consumer spending and industrial production figures out of China later in the week," says Kamil Amin at Caxton FX.

Amid the lack of any data releases out of either Australia or the UK today, we expect to see muted activity in the whole, with the slim possibility of further sterling outflows.

"Uncertainty has recently crept into the minds of sterling bulls and we expect this to remain unless the BoE surprise the market again. With the central bank still expected to be the first to tighten policy among the Group of Seven, we should optimism remain in the whole," says Amin.