Sterling and aussie look to shake off the seasonal blues this yr

Sometimes, the August month is not too form to GBP/USD and AUD/USD. Nonetheless, this yr is proving to be a bit completely different. The previous is up 1.eight% on the month whereas the latter is up 1.5% already to begin August buying and selling. Over the past years, this month is normally the worst month for each foreign money pairs. This is a take a look at the respective seasonal heatmaps during the last 20 years:

Within the case of GBP/USD, the pair has solely posted six constructive August months since 2004. In the meantime, there may be solely 4 such August months for AUD/USD during the last 20 years. However apparently, each did publish constructive months in 2024 and are poised to repeat that once more in 2025 if the primary week is something to go by.

Whereas seasonal components is perhaps a consideration, it is usually vital to take a look at different key developments going down in broader markets.

For one, the greenback has fallen off exhausting after the dismal US labour market report final week. That noticed merchants deliver ahead Fed price minimize expectations with fears of even softer US information nonetheless to come back in Q3 2025. That may be a key driver impacting each foreign money pairs proper now.

Moreover that although, we now have the extra hawkish price minimize by the BOE yesterday – not less than as implied by the financial institution price vote. I might nonetheless argue it does not change something within the larger image however Lombardelli siding to carry the financial institution price is a notable dissent. Nonetheless, this places the BOE on monitor to pause in September earlier than doubtlessly chopping the financial institution price once more in November. It is all on the information now.

After which, we’re seeing the aussie maintain up amid higher threat sentiment in markets. Equities have gone from fearing the worsening financial system final Friday to cheering on Fed price cuts and that is lifting the broader temper. So, that not less than helps to brush apart a number of the negativity again dwelling with the RBA poised to chop charges subsequent week.

All in all, the seasonality charts are a guiding software and one that you may hold in your again pocket for reference in occasions when merchants are in search of one thing to work with. However amid the assorted components above which can be in play now, these will override what we see above as they’re extra pertinent when it comes to influencing worth motion.

Developing subsequent week, the US CPI report will likely be one other key driver to influence the greenback and that can probably assist to set the tone for what’s left of August buying and selling. So, make sure to hold a watchful eye on that.

This text was written by Justin Low at investinglive.com.