The AUD to GBP exchange rate has a bearish outlook, with currency forecasts indicating potential for downward pressure on both currencies.
The Reserve Bank of Australia's expected interest rate hike to 3.85% in February suggests support for the AUD. However, the Bank of England may cut rates to 3.25% as inflation declines, impacting the GBP negatively. Economic growth in the UK is anticipated to slow, adding further downside risk.
Currently, the AUD/GBP trades slightly above its recent average, within a tight range. The market is likely to remain around this range in the near term, influenced by developments in both countries' monetary policies.
An upside risk could emerge if Australian commodity prices surge significantly, boosting the AUD. Conversely, a sharp deterioration in UK economic conditions could prompt more aggressive rate cuts from the BoE, which would weigh further on the GBP, potentially widening the gap against the AUD.