Pound To Aussie Dollar Forecast – Is Now The Best Time To Buy AUD From GBP?

GBPAUD Forecast Highlights

• GBPAUD slumps beneath major psychological level at 2.000
• GBP weakness a driver of the falling rate; near-term support at 1.950
• Rising gilt yields will continue to exert pressure on FX rate

How has the Pound performed against the Australian Dollar recently?

GBP has started off 2025 badly. After only a full week of trading, many GBP pairs crashed through support levels.

Versus the Aussie Dollar, the rate has tumbled through the psychological 2.00. Thus affirming 2.025 as a near-term peak (see below).

The issue for GBP is that its weakness is fairly broad based. It is not retreating against one or two currencies; rather it is falling against most main currencies. This means that the market is downgrading GBP’s economic outlook wholesale. The last time this happened was back in autumn 2022, in the aftermath of the ‘mini budget’ crisis.

This time, Sterling’s correction was also caused by the Chancellor’s budget, in the autumn of 20204. But the negative effect of that budget was slow to hit markets. Things only came to a boil when gilt yields spike.

Technically, the rate is now surrendering the end-2024 rally bit by bit. Looking south, there could be near-term support near 1.950, followed by another at 1.915. But whether these level will hold depends on the sentiment on GBP. Should Sterling slump further, GBPAUD will cut through these short-term support levels like a hot knife on butter.

This is not to say AUD is strong (see USDAUD – at two-year high). Just that GBP is weaker, dragged lower by deteriorating macro factors.

Is it a good time to buy Aussie Dollars with pounds?

• GBPAUD has checked its multi-quarter advance since late 2024. The rate is weakening below the 2.000 level.
• If you do need some Australian dollars now, you may wish to sell some GBP now before it depreciates further. Use any rebound near 2.000 to sell more GBP.
• You may bet on GBPAUD rebounding above 2.000 later on. But that may not happen in the near term, unless AUD takes a dive.

Will the pound get stronger against the AUD in 2025?

One important macro issue for Australia (and AUD) this year is whether the commodity cycle will turn bullish in next few quarters.

Remember Australia is one of the most mineral-rich nations in the world. The country is blessed with vast quantities of natural resources. From oil to uranium to copper, the country exports these vital minerals to many fast-growing Asian nations. Iron Ore and Coal earns the land Down Under A$240 billion in export earnings (2023) alone. Mining contributes to 11.4 percent to Australia’s GDP. In essence, Australia is a commodity powerhouse.

In 2024, commodity struggled to gain traction due to the slowing Chinese demand. But there are signs that the Chinese government is trying to revive the beleaguered economy, such as rate cuts. Whether this will help to improve demand for base commodities in the first half of 2025 remains questionable. Investors have yet to see tangible signs a turnaround is materialising and they are not betting hugely on commodities strengthening.

Despite this reservation, commodity prices are slowly stabilising, as proxied by this Commodity ETF (DBA.US). Chartwise, prices are finding some tentative support at US$20; while crude oil prices have rebounded from $70.

But commodity prices alone is insufficient to boost the AUD outlook.

The local economy has to beat expectations. But like GBP, the Aussie economy is struggling to contain inflation altogether. In the last monetary meeting (December 10), the Reserve Bank of Australia admitted that the ‘underlying inflation remains too high.’ Due to this, the policy rate remains stuck at 4.35 percent. The restrictive AUD monetary stance indicates slim chances of AUD receiving a market upgrade – unless the central bank indicates it will migrate to a more accommodative policy.

Unfortunately, GBP is facing similar macro difficulties, eg high inflation and anaemic growth. So for GBPAUD it is a race of which currency weakens less. As gilt prices crashing to long-term lows, the bet is on weaker GBP in the near term (see below). According to some broadsheets this week (eg Telegraph), traders are now increasing bearish bets on Sterling as demand for gilts wilts.

What is the GBPAUD forecast in weeks, months, and years?

According to poundsterlinglive.com, Brokers are predicting fairly horizontal levels for GBPAUD.

The aggregate data in that website suggests GBPAUD to hover at around 1.980 in the coming weeks, before slipping to near 1.96. Note, however, no forecast is above 2.00 until the end of the year (see below). So overall bearish.

However these forecast points are just expectations. FX trends can change quickly given a new set of economic data. The base case is that GBPAUD will slip due to weaker GBP action.

Source: poundsterlinglive.com (Jan 2025)