AUD To GBP Forecast: Will The Pound Gain Ground?

The AUD looks uncertain against the British pound.

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Arielle Executive - Sydney, Melbourne, New York

Last updated: July 4th, 2024

aud to gbp prediction
Arielle Executive - Sydney, Melbourne, New York

Last updated: July 4th, 2024

Reading Time: 4 minutes

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 $1.26 US dollars, €1.18 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 exchange rate between the AUD and the GBP.

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.

AUD/GBPDec 24Jun 25Dec 25
NAB Forecast0.530.550.56

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

The GBP/AUD currency pair is currently 1.8961 (as of 27 June), down from a high of 1.9351 earlier in June.

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 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.

However, ING expects most of the GBP’s weakness to be channelled via the GBP/USD pair.

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

In light of Australia’s high May monthly CPI figure, which came in above expectations at 4.0%, Chanana said it “suggests there may be room for AUD outperformance to last, for now…”

For the GBP/AUD pair, she said:

“While GBP is holding up well for now and likely to remain so in the run-up to the July 4 UK election, but economic concerns could take focus after that, and the Bank of England might be forced into action as well.” — Saxo head of FX Charu Chanana.

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.

The US dollar’s ‘safe haven’ status and the fact that the UK slipped into a technical recession at the end of 2023 have both contributed.

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:

  • Cash rate differentials—with more support for the Aussie against the pound if a potential rate hike here in H2 2024 eventuates, and cuts in the UK and US occur.
  • 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 signalling future rate cuts with the bank acknowledging at its June meeting — where it held rates at 5.25% — that indicators of short-term inflation expectations are moderating.
  • Rising unemployment, with the jobless rate rising to 4.4% in the three months to April 2024, which is the highest level in more than two years.
  • Robust wage growth that could put upside pressure on inflation — which recently lowered back to 2% — driven by a rise in the minimum wage.

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 Aussie rose 0.4% higher against the greenback and the pound during the day’s session based on the higher-than-expected data.

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.

But 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

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0 thoughts on “Plus500 Review Australia: Pros, Cons, Fees & Verdict

  • 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.

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