Pound to Australian dollar forecast: Global growth forecast lowest since 2009

Coronavirus and China Developments Top Priority for Aussie

Pound to Australian dollar rate

The pound to Australian dollar rate has been very mixed in the last week as investors are forced to grapple with the ever-changing nature of two of the biggest market forces at present, Brexit and the trade wars.

Whilst sterling is lower due to the Brexit uncertainties, rates are still above the lower points of 2019 GBP/AUD levels, nestled in the 1.82s at the time of writing.

Pound to Australian dollar forecast

My longer-term forecast would have to be negative for the Australian dollar as the global economy is slowing, we have seen both the IMF and the OECD cut their global growth forecasts which will only weigh negatively on a currency like the Aussie, which is so reliant on buoyant global trading sentiments.

Despite this, in the shorter-term, we could now quite feasibly drop below the 1.80 level as the market begins to digest some of the latest news surrounding who will be the next UK Prime Minister, and of course importantly, what their views on Brexit would be. Clients looking to buy or sell the pound for the Australian dollar will also need to factor in the lack of certainty on the outlook of interest rates by the Reserve Bank of Australia, who have been predicted to be considering a rate cut soon.

Such sentiments are the source of some of the turbulence on the Aussie in May as investors had to grapple with the uncertainty and lack of clarity over whether a hike would be forthcoming. By ‘pricing in’ a possible cut, the Aussie fell and remained weak, the uncertainty of the elections then also saw the currency weaken.

I am also concerned that now, the Aussie will lose more value as the market is forced to consider all the uncertainty surrounding the trade wars. It seems to me uncertainty could set us up for some more volatility ahead, so if you are considering a transfer soon on GBP/AUD levels please do get in touch to discuss the forecast.