Pound To Australian Dollar Price Forecast: RBA Repricing Keeps Aussie Under Pressure

The Pound-Australian Dollar could extend gains if Australian consumer confidence weakens, while Sterling remains supported by UK-EU optimism.

The Pound to Australian Dollar (GBP/AUD) exchange rate raced higher last week amid a dovish repricing of Reserve Bank of Australia (RBA) interest rate hike expectations.

At the time of writing, GBP/AUD was trading at AU$1.9032. Up around 0.9% from the start of last week’s session.

DAILY RECAP:

The Australian Dollar (AUD) faced notable headwinds through the first half of this week, amid a sharp repricing of RBA rate hike bets.

This started with the RBA’s latest policy meeting, where the bank failed to deliver the hawkish signal markets had been anticipating.

While the RBA raised rates by 25 basis points to 4.6% – its highest level since 2011 – much of the move had already been priced in, leaving investors focused instead on Governor Michele Bullock’s guidance, which proved more dovish than markets had expected.

The AUD selloff then gathered pace on Wednesday as RBA rate hike bets were further diminished after Australia’s August inflation print undershot expectations.

After bottoming out, the ‘Aussie’ was able to stabilise in the latter half of the week, aided in part by trade data showing that Australian exports rebounded in August.

The Pound (GBP) enjoyed broad support last week, rallying on the back of upbeat UK economic data and renewed optimism surrounding the UK’s future relationship with the European Union.

On the data front, Sterling benefitted from the Office for National Statistics’ (ONS) upward revision to second-quarter GDP, which was upgraded from 0.4% to 0.5% and strengthened expectations that the Bank of England (BoE) may raise interest rates later in the year.

Sterling’s gains were then reinforced as Prime Minister Andy Burnham outlined a potentially significant reset in the UK’s relationship with the EU.

Burnham suggested the UK should consider a range of options, including ‘going all the way’ and rejoining the EU.

Near-Term GBP/AUD Forecast: Declining Consumer Confidence to Weaken the ‘Aussie?

Looking ahead, the Pound to Australian Dollar exchange rate may push higher again at the start of this week with the publication of Australia’s latest consumer confidence index.

Household sentiment is expected to have deteriorated again in October as higher interest rates and rising energy prices place more pressure on consumers.

Meanwhile, the UK’s economic calendar is looking pretty sparse this week, leaving movement in the pound to potentially be driven by wider market trends.

Our currency coverage draws on live market data, official economic releases and published bank research.