Pound Sterling To Australian Dollar Forecast: Sterling Plunges But RBA Rate Cut Keeps GBP/AUD Higher

Published: 20 Oct 2017 21:24 Currency Markets Ecomomy News Forex

British pound to australian dollar exchange rate forecast

Given that the Australian Dollar continues to struggle against global stocks and commodity price volatility, the GBP/AUD exchange rate is forecast to advance this week. All eyes, however, were focused on the RBA as they slash interest rates to a record low of 1.75%

The Reserve Bank of Australia has slashed the interest rate by 25 points to a record low of 1.75 percent, sending the GBP/AUD exchange rate rocketing higher.

The latest Markit Manufacturing PMI for the UK has caused the Pound to soften considerably, although the fallout from the RBA’s rate cut is keeping the Pound to Aus dollar rate bullish.

The index has revealed that UK manufacturing sector activity actually declined last month, despite forecasts of a minor increase in growth.

The move saw the Aussie exchange rates plunge acorss the board, falling -1.17% vs Canadian dollar, -1.27% vs the euro, -1.34% vs the British pound, -0.68% vs the NZ dollar and finally -0.77% against an otherwise weak US dollar.

The Pound may slide against the soft AUD in the future, if UK ecostats match forecasts

The next notable UK economic announcement will be the construction PMI for April, which is expected to show a fall. By contrast, Australia’s performance of service index for April is expected to rise out of the contraction zone

After Aussie economic data produced mostly disappointing results last week, the Australian Dollar exchange rates turned bearish against currency exchange peers.

Of particular detriment to demand for the AUD currency was an unexpected drop in first-quarter consumer prices.

Meanwhile, the GBP/AUD exchange rate ended last week trading close to a 2016 high as easing ‘Brexit’ concerns allowed for a sustained relief rally.

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foreign exchange rates
This week's most notable economic event for sterling investors looking to send money to Australia will be the RBA's cash rate decision.

Latest New Zealand/Australian Dollar Exchange Rates

On Friday the Pound to British Pound exchange rate (GBP/GBP) converts at 1

At time of writing the pound to pound exchange rate is quoted at 1.

Today finds the pound to us dollar spot exchange rate priced at 1.262.

Today finds the pound to new zealand dollar spot exchange rate priced at 2.114.

Please note: the FX rates above, updated 29th Mar 2024, will have a commission applied by your typical high street bank. Currency brokers specialise in these type of foreign currency transactions and can save you up to 5% on international payments compared to the banks.

Other Currency Exchange News

Will Pound Sterling (GBP) Exchange Rates Continue Bullish Run?

The British Pound exchange rates ended last week on a strong footing despite mixed results from domestic data and divergent EU referendum opinion polls.

The lack of significant Sterling depreciation suggests that trader fears regarding a ‘Brexit’ have eased considerably.

Should this continue to be the case the Pound Sterling is likely to extend gains over the coming week.

In terms of domestic data to look out for, the UK’s Services PMI is likely to provoke significant volatility given that the services sector is the single largest contributor to British Gross Domestic Product growth.

australian dollar to pound exchange rate chart

Will US Dollar (USD) Weakness Cause AUD Conversion Rate Gains This Week?

There is a high chance, given the reduced odds of a near-term Federal Reserve rate hike, that the Australian Dollar will strengthen over the coming week.

With that said, however, concerns over falling inflation and ‘Aussie’ (AUD) overvaluation may limit the appeal of the Oceanic unit.

In terms of significant ecostats to look out for, Tuesday’s Reserve Bank of Australia (RBA) interest rate decision is likely to provoke significant volatility, especially given mounting uncertainty as to how policymakers will approach policy outlook.

Leading Foreign Exchange Analysis and Australian Dollar Exchange Rate Forecasts

This week's RBA meeting continues to drive most short-term risks to the current GBP/AUD exchange rate strength

Citi Economics note that "With underlying inflation lower than expected and well below the bottom of the 2%-3% target, this makes next week’s Board meeting very much live, with a rate cut now a 50:50."

In relation to the AUD/USD pairing, analysts at Citi see further downtrend likley should the RBA adjust their rate this week:

"A massive move overnight in Aussie rates and currency following the CPI miss with domestic banks also now weighing in with the prospect of RBA cutting rates 25bp next week while markets attach a 61% probability of the same."

"AUDUSD is currently trading at 0.7600 support with next support seen at the 0.7450 level, likely to be tested should the RBA follow through with the cut Tuesday."

ABN AMRO also suggest a rate cut in on the cards:

"Financial markets are now pricing in about a 60% probability that the RBA will lower the Official Cash Rate (OCR) by 25bp to 1.75% on 3 May."

"Though we do not rule out that the RBA may choose to wait a bit longer to assess the trend in the job market and inflation outlook, we are of the view that there is sufficient evidence for the RBA to resume its monetary easing bias sooner rather than later."

"The AUD is likely to head lower towards 0.74 as a result.

Key GBP and AUD Events in This Week's Forex Calendar

This week's key AUD-impacting economic events include the AIG Manufacturing Index (source), MI Inflation Gauge, NAB Business Confidence (source), Commodity Prices, Australian Building Approvals, (source), Caixin Manufacturing PMI, Cash Rate & RBA Rate Statement (source), Annual Budget Release (source), HIA New Home Sales, Aussie Retail Sales and the Trade Balance.

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