The AUD to GBP exchange rate currently shows a bearish bias.
Key drivers include:
- The Reserve Bank of Australia's anticipated interest rate hike to 3.85% in early 2026, which may support the AUD against the GBP.
- The Bank of England's signals of future interest rate cuts, which can weaken the GBP.
- UK inflation is expected to decline to the BoE's target by late 2026, which could further pressure the currency.
In the near term, the AUD/GBP exchange rate is expected to trade within a narrow range, slightly above recent lows, as it has been stable in the last three months.
An upside risk could emerge if the RBA's rate adjustments exceed expectations, boosting the AUD. On the downside, a significant downturn in UK economic growth or tighter fiscal policies could heighten the pound's appeal, leading to further depreciation of the AUD against the GBP.