The current market bias for the AUD to GBP exchange rate is range-bound.
Key drivers include the interest rate differential, where the Reserve Bank of Australia is likely to raise rates in early 2026, contrasting with the Bank of England’s projected reductions. Inflation trends also play a role, with Australian inflation exceeding target levels, while UK inflation is expected to decline, contributing to monetary diverging practices.
In the near term, the AUD/GBP could trade within a stable range, reflecting its recent movement just above its three-month average.
Upside risks include stronger-than-anticipated commodity demand bolstering the AUD. Conversely, a significant downturn in UK economic conditions could prompt further easing by the Bank of England, weakening the GBP.