AUD To GBP Forecast: Will The Pound Gain Ground?

The UK’s official currency, the British pound (GBP), is one of the world’s most popular currencies for international trade and forex trading. It’s the strongest of the G10 currencies — with one pound sterling buying $1.29 US dollars, €1.19 euro, and around $1.90 Australian dollars.

Compared to this currency stalwart, there’s less demand globally for the Australian dollar (AUD) and the Aussie also suffers when risk sentiment is high or commodity prices dive, due to our significant reliance on China’s growth.

Learn what’s ahead in 2024 for the AUD and GBP exchange rate.

Tip: Zoom out for a better historical context of AUD/GBP performance.

Expert AUD vs GBP Forecast For 2024.

From the perspective of Australians looking to exchange their AUD for GBP, forecasts are for an appreciation in the Aussie dollar’s value as we move into 2025.

Over the last five years AU$1.0 has bought £0.54 on average. One Australian dollar is currently being exchanged for £0.526, but NAB’s forecasts show it moving higher.

Above: By June 2025, NAB believes AUD/GBP will be £0.55.

The GBP/AUD currency pair is currently 1.94664 (as of 24 October), up from a low of 1.89286 earlier in July.

ING says that recent dovish actions by European banks — including a rate hold by the European Central Bank and a cut from the Swiss National Bank — are positive developments for the US dollar.

And it’s bearish on the pound sterling given it predicts three rate cuts by the Bank of England (BoE) in 2024.

Saxo’s head of FX Charu Chanana thinks downside pressures will likely build on the GBP/USD pair into the second half of 2024.

The Pound’s Performance In Decline?

As one of the strongest currencies in the world, the British pound (GBP) is a free-floating currency that is among the top four most-traded currencies on the forex market.

Key reasons for the pound’s strength include:

While the pound has been generally stronger than the US dollar and the AUD in recent decades, a few major events have knocked the GBP’s value against leading currencies including:

In recent years, the pound has also lost some ground to a US dollar that has been remarkably resilient in the face of subdued global growth, widespread monetary policy tightening and geopolitical upheaval.

However, in March 2024 Bloomberg reported that the UK economy seems to be holding up better than expected with its high interest rate, which meant the British pound was beating more than 90% of the world’s currencies.

The pound weakened immediately following the Bank of England’s decision on June 20 to hold interest rates at their current 16-year high, but rebounded within a week to trade at $1.26 US dollars and $1.89 AUD at the time of writing.

Cash Rate Divergence Key To Appreciation Over GBP?

How a lower pound against the greenback affects cross rates like the GBP/AUD in the second half of 2024 is yet to be seen, but on the AUD side we could see impacts from:

On the flip side, challenges facing the UK in coming months that could weaken the pound include:

Money market pricing suggests a 50-50 chance of an August rate cut by the BoE.

Deutsche Bank said it believes the Bank of England will cut its cash rate by 50 basis points this year when it meets in August and November. There’s speculation that the US Federal Reserve could begin easing sometime between September-December.

Meanwhile, in Australia, monthly CPI indicator results for May (released 26 June) — which revealed a shock 4.0% increase in inflation — boosted the odds of a cash rate hike when the Reserve Bank of Australia next meets in August.

The Last Word On AUD/GBP Outlook 2024.

Warnings of rate rises in Australia, contrasting with expected monetary easing by both the UK and US central banks before year-end could see the Australian dollar strengthen relative to the pound.

However, while investors prefer high-interest economies, the pound’s strength may still outweigh any investor interest in Australia’s on-risk currency if global conditions deteriorate any further.

Jody