**Pound to Australian Dollar Forecast: Sterling Strengthens as RBA Hints at Policy Easing**
*Original reporting and analysis by James Barrat, ExchangeRates.org.uk*
**Overview**
In the wake of shifting monetary policy signals, the Pound Sterling (GBP) has gained ground against the Australian Dollar (AUD). Renewed speculation about interest rate direction from both the Bank of England (BoE) and Reserve Bank of Australia (RBA) persuades currency traders to revisit their strategies and forecasts for the GBP/AUD pair through 2025.
Recent developments within both economies and policy statements from officials have reinforced expectations that the GBP/AUD exchange rate could continue its upward trajectory, especially as the RBA hints at adopting a looser stance and the BoE maintains a comparatively hawkish tone.
Below, we provide a detailed analysis of the latest economic data, central bank policies, market sentiment, and analyst forecasts for the Pound to Australian Dollar rate through 2025.
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**Central Bank Developments: Diverging Directions**
Both the UK and Australia have grappled with inflation and sluggish growth since the pandemic. Monetary policy has been a decisive factor influencing their currencies. Recent signals from both the BoE and RBA have provided new clues about their future actions:
* **Bank of England:**
– The BoE has kept its benchmark rate at a 15-year high, citing persistent inflationary pressures.
– Despite weak GDP growth, core inflation, particularly in services, remains a concern for policymakers, leading to a delay in any potential rate cuts.
– Recent BoE statements and meeting minutes suggest a data-driven approach. Any rate reductions will likely proceed cautiously.
– The central bank’s stance provides relative support to GBP, especially compared to its G10 peers considering or executing rate cuts.
* **Reserve Bank of Australia:**
– The RBA has indicated that while inflation remains somewhat sticky, downside risks to economic growth are mounting.
– During its latest policy meeting, the RBA kept rates unchanged but acknowledged growing slack in the labor market and noted an expectation for inflation to moderate in upcoming quarters.
– Market participants interpret these signals as a precursor to a potential rate cut in late 2024 or early 2025 unless inflation shows signs of reacceleration.
– The RBA’s shift toward a more dovish stance puts downward pressure on the Australian Dollar.
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**Economic Data: Contrasts in Performance**
The economic backdrop for the UK and Australia also plays a crucial role in shaping currency movements:
* **United Kingdom**
– Inflation remains above the BoE’s 2 percent target but is gradually easing.
– Wages are rising, but so is the cost of living, keeping consumer sentiment subdued.
– The labor market is showing resilience, with unemployment staying relatively low, yet growth in new jobs is slowing.
– GDP growth is modest and vulnerable to global uncertainty, but the services sector’s continued expansion underpins overall performance.
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