The GBP to AUD exchange rate is currently bearish, positioned at 90-day lows near 2.0018 and trading 1% below its 3-month average of 2.0228.
Key drivers include the divergence in interest rates as the Bank of England (BoE) is expected to cut rates, reflecting slowing inflation and growth, while the Reserve Bank of Australia (RBA) is poised to raise rates to address rising inflation. Additionally, economic concerns in the UK related to fiscal policy are likely to add downward pressure on the pound. On the other hand, positive economic forecasts for Australia, alongside the RBA's hawkish stance, indicate support for the Aussie.
In the near term, expect the GBP/AUD to trade within a stable range, influenced by further developments in monetary policy and economic indicators. Upside risks could stem from stronger-than-expected UK economic data, while downside risks may emerge from worsening market sentiment or further UK fiscal vulnerabilities.