GBP AUD Forecast: Pound to Australian Dollar Exchange Rate Predicted To Head Higher

Modified: Tuesday, 17 December 2013 16:25 BST - Written by James Fuller

STORY LINK GBP AUD Forecast: Pound to Australian Dollar Exchange Rate Predicted To Head Higher

The Pound Sterling took another hit earlier on today with the publication of November’s UK Consumer Price Index inflation figures. The key price rise numbers came out slightly below analysts’ expectations at 2.1% - down from October’s counterpart showing of 2.2%. The data means that the rate of UK inflation is now only marginally above the British government’s stated target of 2.0%, leading economists to question whether any tightening of UK monetary policy is merited at this stage.

The Pound gave up ground against most of the other sixteen most actively traded global currencies as a result, sending the Sterling to euro exchange rate (GBP/EUR) down to 1.1816 earlier. Meanwhile, the Pound Dollar exchange rate (GBP/USD) slipped to as low as 1.6252 during this morning’s trading session.

The Pound has traded on a level footing so far today against the Australian Dollar, with the Sterling Aussie exchange rate (GBP/AUD) remaining at or around the 1.8250 level throughout the day. Although the Australian unit slipped against the New Zealand Dollar in the aftermath of the minutes, sending the Australian Dollar to New Zealand Dollar exchange rate (AUD/NZD) down to its lowest level for some five years, the Aussie has held up relatively well against the other majors. The RBA’s assertion that its budget deficit, which is forecast to climb to AUD47bn by the middle part of next year, is likely to endure for the next decade was hardly good news for the Australian unit.

With the RBA also having reiterated that a further loosening of its monetary policy remains an option moving forward, there may be further gains to come for GBP AUD. Such an outcome could send GBP AUD up into the mid-1.8000s – a level not seen for the pair since the early part of 2010 – before Christmas comes. A break to this level would send out a strongly bullish signal for the pair.

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