For the value of the British pound sterling relative to the Australian dollar, we need to look at the GBP/AUD currency pair. The GBPAUD is a cross-currency pair. Alongside general market sentiment, the pair is subject to specific factors impacting the UK and Australian economies.
Interest rate differences, global risk sentiment, and macroeconomic factors all have an impact on the GBPAUD, resulting in high to moderate volatility. The Australian dollar is strongly impacted by commodities markets, especially those involving iron ore and other exports, as well as economic conditions related to China, Australia’s main trading partner, whereas the pound responds to events that are specific to the UK and more general risk patterns.
GBPAUD Performance & Price Chart
Over the years, key economic factors, including GDP growth, employment, and inflation, as well as monetary policy choices made by the Reserve Bank of Australia (RBA) and the Bank of England (BoE), have influenced the price fluctuations of the GBP/AUD exchange rate. However, traders should also be aware the pair’s volatility may increase due to shifts in global risk sentiment and commodity prices.
While the GBPAUD ranged somewhat for the majority of 2024, it broke higher in December. Through 2024, the GBP/AUD ended up 8.3% YTD.
| Timeframe | Performance |
|---|---|
| 3 Months | +4.02% |
| 6 Months | +6.82% |
| Year-to-Date | +8.26% |
| 1 Year | +8.55% |
Other Minor Currency Pairs
GBPAUD Forecast
Analysts at Nomura said in their recent outlook for the British pound that they expect it “to continue to gain ground gradually against other currencies where their respective central banks are more concerned about the downside risks to growth rather than sticky price pressures.”
Meanwhile, a recent article from Forex.com senior market analyst Fiona Cincotta, looking ahead to 2025, argues that the UK economy is expected to continue to grow. However, she noted that “GDP could be weaker than the 1.5% forecast by the BoE owing to several key factors, including uncertainty surrounding trade and a less expansionary UK budget.” This would, of course, have a negative impact on the pound.
For the Australian dollar, Morgan Stanley sees a positive 2025. In November, the investment bank stated: “In the dollar bloc, we expect AUD to remain a clear outperformed.” Morgan Stanley reportedly added that the AUD will benefit due to Australia’s “limited trade risk exposures and a relatively hawkish RBA.” Their economists “expect the RBA to first cut only in May 2025, and the RBA cash rate is likely to be the highest in the G10 after the Fed.” However, it should be noted that in December, the AUD declined in December due torising odds of fewer rate cuts by the US Federal Reserve.
Our View: GBP/AUD remains a key pair for traders monitoring the balance between UK macroeconomic trends and Australia’s resource-driven economy. While the pound has shown strength in 2024, future movements will more than likely depend on the potential rate cut paths for both in 2025, while external factors such as China’s growth outlook and Trump tariffs could also impact the pair.
Trading the GBP/AUD
Because of its susceptibility to commodity prices and economic conditions, the GBP/AUD exchange rate presents opportunities for traders. Aspects that traders of the currency pair need to be aware of include:
Commodity Markets: Since commodity demand and prices, especially from China, have a significant impact on the AUD, traders should consider how these developments may affect their positions.
Trump Tariffs: While some analysts have said they expect potential Trump tariffs to have limited impacts on either economy, it is still important to be aware of the possible volatility they could cause.
UK Budget: While the budget has been announced, the longer-term impacts it could have on the UK economy are yet to be felt. Some companies have warned of price increases, while there have also been suggestions that it could result in job losses. For a long-term GBP outlook, traders should consider the effect it could have on the UK economy.
