The Reserve Bank of Australia meets for another policy meeting this week, and traders seeking volatility should consider the GBP v AUD pair.
Sterling has had its woes after the latest stimulus plans from the government, but the Bank of England's QE restart has boosted the pound.
GBPAUD – 4H chart
The 4H chart shows that the 1.60 level provided a low before the BoE rally. Traders should look for a peak in the pound and a potential sell opportunity.
The OECD expects Australian interest rates to hit an 11-year high in 2023 at 3.6 percent as inflation worsens. The international finance group is more worried about rising interest rates than the big Australian banks.
The RBA has hiked rates over five consecutive months, taking the cash rate in September to a seven-year high of 2.35 percent.
"Further policy rate increases are needed in most major advanced economies to ensure that forward-looking measures of real interest rates become positive, and inflation pressures are reduced durably," the group said.
"Policy interest rates are projected to rise to 4.5 to 4.75 percent in the United States, 4.5 percent in Canada, and 4.25 percent in the United Kingdom in 2023, reflecting the visible labour market pressures in these countries, and 3.6 percent in Australia."
The RBA is expected to hike rates by 0.50% at Monday's meeting. During the central bank's previous meeting, Governor Philip Lowe said that the estimated neutral level was 2.50%, which would neither stimulate nor restrict economic activity.
In a recent Reuters poll, over 70% of economists predicted the RBA would raise its cash rate by half a point to 2.85% this week. The remaining eight analysts forecast a smaller 25 basis point hike.
"A lot of global interest rate expectations are being set in the United States," said Tony Morris, head of ANZ economics at BofA.
"If the Reserve Bank doesn't maintain the current pace, then further currency weakness will feed through into a much faster pace of domestic inflation."
MPs warn UK prime minister Liz Truss she has days to reverse the controversial tax and welfare cuts. Failure in doing so would result in facing a party rebellion that could remove her before Christmas.