Pound to Australian Dollar Exchange Rate Forecast: BoE and Australian Labour Data in Focus

Sliding Metal Prices Dampened Australian Dollar (AUD) Demand

Market risk appetite continued to decline at the start of the week, thanks to ongoing speculation over the odds of the Federal Reserve raising interest rates before the end of the year. The relative strength of the US Dollar prompted both copper and iron ore to fall to their lowest levels since the end of June. This did not reflect well on the commodity-correlated Australian Dollar (AUD), which slumped across the board in response.

Confidence in the Pound (GBP) was not dented by the news that the British Chambers of Commerce had lowered its growth forecasts and issued a warning that uncertainty is likely to dampen the UK’s growth prospects in coming months. With fresh domestic data relatively lacking, though, there was little to prevent investors from returning to a more positive outlook. As a result the Pound to Australian Dollar (GBP AUD) exchange rate trended higher, benefitting from the risk averse mood.

GBP AUD Exchange Rate Forecast to Rally in Response to Less Dovish BoE

The appeal of Sterling is likely to turn muted ahead of the Bank of England’s (BoE) September policy meeting, as investors await a greater gauge on the direction of policymakers’ outlook. Should the possibility of further policy easing be floated then the GBP AUD exchange rate is expected to return to a downtrend. However, if the Monetary Policy Committee (MPC) indicates less of a willingness to cut interest rates again in the near future then the Pound could find further bullish support.

Volatility for the ‘Aussie’ is expected in response to August’s raft of Australian labour market data, which is forecast to point towards relative stability within the domestic economy. Tighter jobs conditions would encourage the Reserve Bank of Australia (RBA) to maintain a more neutral policy bias, underlining greater confidence in the outlook of the antipodean currency. So long as any particular downside surprise does not materialise within the often volatile measure then the Australian Dollar is predicted to rally strongly.

Current GBP, AUD Exchange Rates

At the time of writing, the Pound to Australian Dollar (GBP AUD) exchange rate was trending higher at 1.7688, while the Australian Dollar to Pound (AUD GBP) pairing was on a downtrend in the region of 0.5652.