How global events impact the GBP/AUD currency pair

The GBP/AUD currency pair represents the exchange rate between the British pound (GBP) and the Australian dollar (AUD). This currency pair is one of the most exciting to trade in the forex market. The ‘ticker symbol’ is how the exchange rate is represented in forex markets.

Basically, the GBP/AUD pair states how much one British pound costs in Australian dollars. GBP is known as the ‘base currency’ and AUD is called the ‘quote’ currency.

In 2025, many analysts expect the currency pair to continue the bullish trend; GBP/AUD has been on an upward trend since September 2022. It is predicted that the rate will stay in the range of 2.2000-2.2200.

The history of GBP/AUD

The British pound dates back to around 775. After decimalisation in 1971, the currency developed into its present, modern form. Currently, it is the fourth most-traded currency in the forex market and is a significant portion of global daily trading.

The GBP/AUD currency pair has been in existence since February 1966 when the new Australian dollar was decimalised and split into 100 cents per dollar. Before decimalisation, currency was in pounds, shillings, and pence. Due to its proximity to Asia, trade between Australia and Asia has influenced the Australian dollar over the years.

Since replacing its imperial currency, the new AUD has performed fairly well against GBP. Since the year 2000, the price of AUD per £1 has decreased considerably. In September 2002, it reached highs of $2.90962 per £1 and dropped to just $1.43810 per £1 in March 2013. This fall demonstrates the volatility of the British economy, especially since the recession in 2008.

GBP recovered against AUD soon after March 2013, returning to highs of $2.18 to the pound in September 2015. However, with the UK’s decision to leave the EU, the pound dropped again against AUD to $1.61 to the pound in October 2016. Since then, with both economies experiencing serious challenges due to Covid-19, the GBP/AUD exchange rate has stabilised.

Why is the GBP/AUD forex pair important?

GBP/AUD is important because of the history between the two countries. Australia continues to play a crucial part in the British Commonwealth. Britain holds the eighth position out of Australia’s top ten trading partners, despite being on opposite sides of the globe.

The British pound and the Australian dollar are both major currencies in the pasaran forex, but GBP/AUD is considered a ‘minor’ currency pair as it does not include the US dollar. Minor currency pairs are often less liquid than major pairs that include USD, but there are plenty of opportunities for buying and selling GBP/AUD.

How the global economy can influence the GBP/AUD pair

There are three key factors that can influence the GBP/AUD currency pair:

1. Performance of British and Australian economies

The value of GBP/AUD is directly connected to how well British and Australian economies perform. If one of these economy’s is booming with strong GDP growth and low unemployment, the country’s currency strengthens as overseas investors will be more attracted to invest in an economy that has growth potential. In the same way, if either economy is stalling or moving towards recession, investors may move their money out.

For instance, since Brexit and the UK’s departure from European Union, operating costs increased for some UK industries due to import tax on goods and services from outside the EU’s single market.

The Australian economy relies heavily on precious commodities, with plenty of mining opportunities for coal, logam and lots of other commodities. When Australia’s exports are strong, the AUD performs well against major currencies like the GBP.

2. Central bank decision making

Interest rates determine the cost of borrowing money as well as how much can be earned from saving. The main factor is the ‘bank rate’, or rate of interest, set by any central bank, which determines interest rates for all other types of lending, including for business loans and mortgages.

An increase in the bank rate makes borrowing money more expensive, which may deter investors for taking out new loans to fund new projects. On the other hand, when the bank rate decreases, borrowing money becomes cheaper so investment is more attractive.

Interest rates can either boost or weaken the value of a currency. Higher interest rates can increase returns on bonds and gilts for foreign investors, attracting overseas capital and strengthening the local currency.

It’s also important to evaluate the influence central banks have over AUD and GBP.

The Bank of England (BoE) is the central bank for GBP and the bank’s monetary policies impact the value of GBP. If inflation rises too fast, the BoE may take action to control inflation, such as raising interest rates. The Reserve Bank of Australia acts in a similar way to the Australian dollar. Traders watch these changes to predict the future direction for GBP/AUD.

3. Politics

Political events, including elections, referendums, and government reshuffling can bring volatility to the market, influencing the GBP/AUD exchange rate. A major example is the UK’s Brexit vote, which caused considerable weakness in GBP against many other major and minor currencies.

As for Australian politics, the country’s economy is greatly impacted by its relationship with China. Australia exports a large percentage of commodities to China, so when China’s economy grows the Australian economy does too. However, Australia is just as vulnerable to China’s economic downturns. Investor confidence in the AUD may have weakened due to a rise in Covid-19 cases during the global pandemic.

What is the GBP/AUD outlook for 2025?

If the UK economy outperforms the Australian economy, GBP/AUD could move higher. Experts predict that the British pound will strengthen slightly against the Australian dollar as economic growth in the UK is expected to surpass that of Australia, supporting the GBP. However, market volatility is likely to continue due to global uncertainty.

Disclaimer: This information is not considered investment advice or an investment recommendation, but instead a marketing communication. IronFX is not responsible for any data or information provided by third parties referenced, or hyperlinked, in this communication.