The month of August is usually tough for GBP/USD and AUD/USD, but this year both have shown growth. At the start of August, GBP/USD rose by 1.8%, while AUD/USD increased by 1.5%. Since 2004, GBP/USD has had only six positive Augusts, and AUD/USD has had four in the past 20 years.

Impact of Seasonal Trends

Both currency pairs performed well in August 2024 and look set to continue this trend in 2025, despite their typical weak performance. Seasonal trends are significant, but recent market activities are also playing a big role. The US dollar dropped after a disappointing labor market report, which has led to expectations that the Federal Reserve might cut rates. This shift is affecting both GBP/USD and AUD/USD. The Bank of England made a firm rate decision recently but is likely to pause in September, with potential cuts in November. Improved market risk sentiment has helped boost the Australian dollar, thanks to strong stock markets. Looking ahead, the upcoming US CPI report will be crucial in determining the dollar’s direction and will influence trade dynamics for the rest of August. August often sees the British pound and the Australian dollar struggle against the US dollar. Since 2004, GBP/USD has had gains in just six Augusts, and AUD/USD has recorded gains four times. However, after a positive August in 2024, both currencies are starting this month on a strong note. A key concern is the weakness of the US dollar, which traders should monitor closely. The labor report from last Friday, August 1st, was disappointing, reporting only 95,000 new jobs and an increase in the unemployment rate to 4.2%. This has led the market to expect the Federal Reserve will cut interest rates soon to support the economy.

Trading Opportunities Amid Market Changes

For traders focused on GBP, the Bank of England’s recent decision presents a clear opportunity. Although the BOE cut its rate yesterday, a 6-3 vote indicates there’s some disagreement, suggesting a possible pause in cuts for September. This contrasts with expectations of rate cuts from the US Fed, likely benefiting GBP/USD. At the same time, the Australian dollar is gaining from a positive sentiment in global markets, which traders should keep in mind. The anticipation of Fed rate cuts has been viewed favorably by the stock market, with the S&P 500 rising 2.1% since last Friday. This positive sentiment is currently overshadowing worries about the Reserve Bank of Australia, which is expected to lower its interest rate next week. Next week’s US inflation data, specifically the Consumer Price Index, will be crucial. A weak reading would confirm the lackluster economic outlook from the labor report and could speed up the dollar’s decline. This report will play a key role in shaping trading strategies for the rest of August. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now