Pound-Australian Dollar could extend gains if BoE Governor Andrew Bailey reinforces rate hike expectations, while softer Chinese trade may weigh on the Aussie.
The Pound to Australian Dollar (GBP/AUD) exchange rate edged higher on Tuesday, as GBP investors welcomed an upward revision to UK growth expectations this year.
At the time of writing, GBP/AUD was trading at AU$1.8991. A modest increase from the start of Tuesday’s European session.
Pound to Dollar (GBP/USD): 1.324381 (+0.25%)
Australian Dollar to Dollar (AUD/USD): 0.697449 (+0.26%)
DAILY RECAP:
The Pound (GBP) ticked higher on Tuesday after the International Monetary Fund (IMF) upgraded its forecast for UK economic growth in 2026.
The IMF now expects the UK economy to grow by 1.3% this year, up from its previous projection of a 1% expansion.
However, while the IMF’s 2026 outlook improved, it warned that rising energy prices and elevated long-term borrowing costs are likely to weigh on economic activity in 2027, with growth expected to slow to 1.2%.
The upgraded growth forecast comes just a couple of weeks before Chancellor John Healey is scheduled to publish his first Autumn Budget.
The new forecasts have already helped to bring down UK gilt yields, which, coupled with the revised growth outlook, could offer more fiscal headroom for the Chancellor to balance Prime Minister Andy Burnham’s growth ambitions, while also maintaining investor confidence in the UK’s public finances.
The Australian Dollar (AUD) also attracted support on Tuesday after the minutes from the Reserve Bank of Australia’s (RBA) September meeting reinforced expectations that further interest rate hikes remain on the table.
The minutes revealed that policymakers were increasingly concerned about persistent inflationary pressures, with several of the upside risks identified at the previous meeting having since materialised or intensified.
This helped to offset the publication of Australia’s latest business confidence figures, after September’s NAB survey reported morale fell to a four-month low amid heightened cost concerns.
Near-Term GBP/AUD Forecast: Hawkish BoE Remarks to Strengthen Sterling?
Looking ahead to the middle of the week, a speech by Bank of England (BoE) Governor Andrew Bailey may act as the primary catalyst of movement for the Pound to Australian Dollar exchange rate.
If Bailey reinforces recent signals from the BoE that the bank is ready to start hiking interest rates, it is likely to extend Sterling recent gains. Although any signs of caution could trigger a correction.
In the meantime, AUD investors may look to China’s latest trade figures for direction, with an expected slowdown in imports last month potentially reflecting negatively on the ‘Aussie’.
Our currency coverage draws on live market data, official economic releases and published bank research.
