Last updated: January 17th, 2025
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 $1.22 US dollars, €1.19 euro, and around $1.96 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 2025 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 2025.
From the perspective of Australians looking to exchange their AUD for GBP, forecasts are for an the Aussie dollar’s value to remain steady as we move into 2025.
Over the last five years AU$1.0 has bought £0.53 on average. One Australian dollar is currently being exchanged for £0.51, but NAB’s forecasts show it staying within the £0.50-£0.52 range over the next 12 months.
| AUD/GBP | Mar 25 | Jun 25 | Sept 25 | Dec 25 |
|---|---|---|---|---|
| NAB Forecast | 0.51 | 0.50 | 0.52 | 0.52 |
Above: By December 2025, NAB believes AUD/GBP will be £0.52.
The GBP/AUD currency pair is currently 1.96 (as of 16 January), up 1.6% over the previous 6 months. It went as low as 1.89 in July 2024.
Expert Tip.
The GBP/AUD currency pair is a commonly-traded cross pair (aka minor currency pair), which traders may look to for make gains when major pairs like the EUR/USD or GBP/USD don’t offer opportunities.
ING says the pound is likely to deteriorate against a US dollar that has rallied since the re-election of Donald Trump, with markets “pricing in US protectionism.”
With the UK’s most recent CPI data (released 15 January) showing inflation rose more slowly in the 12 months to December 2024 — a continued dovish approach by the Bank of England on interest rates looks more likely.
The rates differential could be positive for the US dollar.
Especially given the Federal Reserve is expected to delay further cuts to its policy rate due to sticky (though easing) inflation and policy uncertainty related to Trump’s incoming administration.
If the pound’s weakness is channelled via the GBP/USD pair, what does that mean for its value compared to the AUD?
The Aussie’s relative strength could hinge on how aggressively China funds stimulus measures to improve its flagging economy. Expected rate cutting by the RBA in early 2025 may also reduce demand for the AUD.
Saxo’s chief investment strategist Charu Chanana said China is facing a “balance sheet recession” meaning measures like rate cuts and devaluation of the yuan have been ineffective — and a planned 1% increase in its fiscal deficit may also not be enough to overcome a domestic demand gap and persistent deflation.
She argues that China’s rate differential with the US, combined with the threat of steep tariffs, will put downward pressure on the yuan.
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:
- Britain’s historical dominance and the pound’s longevity, being one of the oldest fiat currencies still in circulation today.
- The UK being attractive to investors as one of the world’s largest economies by gross domestic product (GDP), rated sixth behind the US, China, Germany, Japan and India.
- The pound sterling being a widely held reserve currency, alongside the US dollar, euro, and the Japanese yen, hoarded by central banks and treasuries.
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:
- The Global Financial Crisis of 2007-09, which saw the pound depreciate by 30%, to see it trading at around 1.40 US dollars.
- The UK’s vote to exit the European Union in 2016 that resulted in the pound falling to a 30-year low. It has yet to recover to its pre-Brexit strength.
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.
In March 2024 Bloomberg reported that the UK economy seemed 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.
US ‘exceptionalism’ has been reflected in the USD’s performance of late. However, the pound was one of the best performers — of G10 currencies — against the US dollar throughout 2024.
At the end of December 2024 a pound was worth US$1.25. The GBP/USD exchange rate fell to $1.21 in early January 2025 and was $1.22 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:
- Cash rate differentials — with more support for the Aussie against the pound depending on CPI data and how cautious the RBA remains.
- China’s continuing slowdown, which could erode the Aussie if upcoming economic data coming out of our largest trading partner worsens.
On the flip side, challenges facing the UK in coming months that could weaken the pound include:
- BoE rate cuts expected — with indicators of short-term inflation expectations are moderating.
- Stagnant GDP growth with 0% quarter-on-quarter growth in Q3 2024, and expectations of flat growth for Q4 too.
- Rising unemployment, with the jobless rate at 4.3% and vacancies for permanent jobs declining rapidly.
- Robust wage growth that could put upside pressure on inflation driven by a rise in the minimum wage.
In contrast, the US Federal Reserve may not recommence easing until December 2025.
Meanwhile, in Australia, monthly CPI indicator results for November 2024 (released 8 January 2025) — revealed a reduction in trimmed mean inflation to 3.2% — boosting the odds of a cash rate cut when the Reserve Bank of Australia next meets in February.
But while financial markets are optimistic about a cutting cycle in early 2025, EY Senior Economist Paula Gadsby said the December quarter CPI print (released in late January) was the one to watch.
She thinks the upside risks to inflation will see the RBA hold at 4.35% until Q2, 2025.
The Last Word On AUD/GBP Outlook 2025.
Expected monetary easing by both the UK and in Australia, compared to a likely pause in cutting by the US central bank could see the Aussie and the sterling weaken.
The pound’s strength may outweigh any investor interest in Australia’s on-risk currency if global conditions deteriorate any further.
Jody
Nelson says:
I attempted to use the “hack” to dodge conversion fees, but sadly after converting AUD to USD on a Wise account, there doesn’t seem to be a way to deposit that money into eToro; i.e. eToro recently disabled Wire transfers and Wise doesn’t support SWIFT transfers for sending USD to a bank in the US?
John Keys says:
CMC Invest are an abysmal in turning around new accounts.
Over 1 month to setup up an account with an investment trust, and still waiting. I was promised 5 business days.
Reg Watson says:
Given that China’s economy is going down the toilet how the heck do we expect an appreciation of the Aussie in 2024 ? We are tied to China.
Regular citizen says:
Unless you can see into the future or time travel, try to refrain from predicting a stronger AUD. It’s now Dec 2025 and contrary to all you top earning ‘economists ‘, the AUD ain’t shit.