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Pound Sterling to Australian Dollar Exchange Rate Forecast: Will GBP/AUD Rally on Hinted BoE Interest Rate Hike?

Australian Dollar Currency Forecast

Chance of GBP/AUD Exchange Rate Recovery on Suggested 2018 BoE Interest Rate Hike

The Pound (GBP) has made a minor decline against the Australian Dollar (AUD) today, falling to an exchange rate of AU$1.7804.

This isn’t the worst pairing exchange rate of the week, but still represents a dip from the high of AU$1.7956 seen on Tuesday.

Pound Sterling might be able to rise sharply against the Australian Dollar on Thursday afternoon, in the wake of a Bank of England (BoE) meeting.

Policymakers will be discussing whether they should move interest rates from 0.5%, although no change is expected at this meeting.

BoE officials could still boost the GBP/AUD exchange rate, however, if they point towards a 2018 interest rate hike, potentially as early as August.

Although the UK’s latest economic news hasn’t been entirely supportive, some economists are still holding out for signs that higher interest rates are incoming.

Confirmation of UK GDP Slowdown could Bring GBP/AUD Exchange Rate Losses

Looking beyond this week’s data, the Pound to Australian Dollar (GBP/AUD) exchange rate could decline when the next UK GDP figures are released on 29th June.

The finalised GDP growth readings are predicted to confirm a slowdown in the first quarter of 2018, which could lower confidence among GBP traders.

The UK economy struggled with a slow start and a pair of snowstorms earlier in the year, so a downgrade of GDP growth doesn’t seem completely impossible.

Australian Dollar to Pound Exchange Rate Forecast: Are Greater AUD/GBP Gains ahead on RBA Events?

The Australian Dollar’s (AUD) fledgling advance against the Pound (GBP) today could turn into greater near-term gains after today and Thursday’s events.

First up will be a speech from Reserve Bank of Australia (RBA) Governor Philip Lowe this afternoon; Mr Lowe will be speaking at a European Central Bank (ECB) event.

The topic is central bank policy, so in addition to general statements Mr Lowe might also touch on any future plans for monetary policy changes in Australia.

Thursday morning will bring more RBA news, in the form of the central bank’s latest bulletin. This provides a snapshot of the economy and also offers economic outlooks.

If Mr Lowe and the bulletin imply that there could be monetary policy tightening in the near-term, the Australian Dollar to Pound (AUD/GBP) exchange rate could rise.

Risk of AUD/GBP Exchange Rate Decline on Disappointing Manufacturing Data

Looking further ahead, the Australian Dollar (AUD) might drop against the Pound (GBP) when manufacturing sector data comes out on 2nd July.

The AIG manufacturing index for June is forecast to show a decline in levels of sector activity during the month.

A forecast-matching slowdown from 57.5 points to 56.5 might not trigger an AUD/GBP exchange rate crash, but could still lower confidence among AUD traders.