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

The pound-to-Australia dollar forecast is an indication of where technical and fundamental analysts think the GBPAUD price may be in the future. You can use these exchange rate forecasts to help you decide if now is the right time to buy Australian Dollars, or if you should wait until the price improves.

GBPAUD Forecast Highlights

• Reserve Bank of Australia held the policy rate unchanged in May; maintaining a hawkish bias
• GBPAUD rallies gently back into range at 1.920-1.950
• The current trend is neutral; further-ranging action is expected

How has the Pound performed against the Australian Dollar recently?

GBP started 2024 in a bullish manner against the Australian Dollar. From 1.860 (A$1.86 dollar to buy one Sterling) the FX rate rallied all the way to 1.950, before a modest pullback to 1.900.

If we expand our perspective further, the GBPAUD rate remains that of a ranging one. The peak near 2.000 continues to mark the recovery peak for GBP; while last year’s low is the floor. Nearer term, resistance is noted at 1.950 and support at 1.890 (see below). By drawing horizontal lines from these reaction points, the area within them is the current fluctuation zone.

In other words, GBPAUD is near equilibrium. Supply is meeting demand. Choppy, but sideways action.

One reason for this is that the central bank of both countries has yet to cut rates. The Reserve Bank of Australia, for example, has indicated it will continue to hold the policy rate, currently at 4.35 percent (cash rate), for the foreseeable future. This is because the central bank observes that “inflation remains high and is falling more gradually than previously thought.” Australia’s labour market is tight; demand growth stronger than expected.

Similarly, in the UK the Bank of England has yet to reduce rates, although it may soon do so given that the ECB has already started the easing process. And economic data from the two nations are not that diverged: low unemployment, sticky inflation, muddled-through economic growth.

Therefore, the market has not really made up its mind where GBPAUD should trend. The rate is thus likely to meander horizontally for the time being

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

• GBPAUD has rebounded (in favour of GBP) in the past few weeks. The rate broke out of the near-term resistance at 1.900 to reach 1.929.
• Can GBP continue its current good form? On the chart, some resistance (selling pressure) is staring at the rate at 1.945-1.950, not too far from the current level.
• If you do need some Australian dollars now, you may wish to take advantage of the recent GBP’s strength to buy some. Watch to complete more AUD purchases near 1.950. That area is resistance. A reversion back into range from there is a distinct possibility.

Will the pound get stronger against the AUD in the second half of 2024?

Australia is one of the most advanced nations in the world. While its land mass is large (6th largest), population-wise the country only houses 26 million (ranked 55th globally). To compensate for its sparsely populated area, Australia 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, in particular, earns the land Down Under A$150 billion in export earnings (2021) alone. Total exports that year amounted to A$460 billion. In other words, Australia is a major commodity exporter.

Why is this info important? The brief exposition above is to draw readers’ attention to the linkage between the AUD and the commodity market.

When commodity prices are booming, the Aussie dollar tends to appreciate – and vice versa. A historical example of this correlation is the decade-long commodity bull run during 2002-2013, where the Aussie dollar soared to parity against the US dollar. To understand the AUD, it pays to look at what’s happening in the commodity space.

But are commodity markets booming now? Not exactly. Iron Ore prices, for example, are 40 percent below its 2021 peak; coal, another major Australia export, is experiencing a bear phase. Prices are down nearly two thirds from its 2022 highs (see below). Unsurprisingly the Aussie dollar is underperforming against the USD, falling from 1.300 in 2022 to 1.500 now.

Source: FRED Data/IMF

Against GBP, the Aussie dollar is not in a bullish mode either.

For the rest of this year, unless economic growth picks up in many Asian countries, Australia’s export growth is unlikely to be much stronger than expected (priced in). This, in turn, means the AUD will continue to range against the GBP. The key level to watch for is the psychological 2.000.

This view is, of course, based on the general economic outlook. In the FX market, trends may change quickly. Should Australia’s growth accelerate or UK’s one plummet, it may change the current trend rapidly.

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

The market consensus, in view of the above info, is that GBPAUD will continue to range along the prior trading range.

According to the aggregate data, traders are expecting GBPAUD to gently retreat near 1.900 in the coming weeks, before pulling ahead (GBP strength) later.

These levels are just expectations. The FX market can change quickly given a new set of economic data. The base case is that GBPAUD will range sideways with choppy price action, until new disequilibrium data that shakes the FX rate into a trend.

Source: poundsterlinglive.com (June 2024)