GBP/AUD Forecast: RBA Interest Rate Decision to Drive Market Volatility

Pound to Australian Dollar Exchange Rate Remains Steady Ahead of Key Economic Events
The GBP/AUD exchange rate traded largely flat on Monday as both the British Pound (GBP) and the Australian Dollar (AUD) lacked fresh economic data to provide significant momentum.

At the time of writing, GBP/AUD is hovering around AU$1.9786, showing minimal movement from Monday’s opening levels.

Australian Dollar (AUD) Strengthens Amid Risk-On Sentiment
Despite a lack of economic data releases, the Australian Dollar managed to edge higher against most major currencies on Monday. This upside was largely driven by an improved market sentiment, which favored risk-sensitive currencies like the Aussie (AUD).

However, gains for the Australian Dollar were limited as investors remained cautious ahead of the Reserve Bank of Australia (RBA) interest rate decision scheduled for Tuesday. Market participants were reluctant to take aggressive positions on AUD until the RBA’s monetary policy stance becomes clearer.

Pound (GBP) Fluctuates Amid Lack of UK Data
The Pound (GBP) exchange rate saw some fluctuations on Monday, strengthening against safe-haven currencies but struggling to gain momentum elsewhere due to the absence of UK economic data.

Similar to the Australian Dollar, Sterling received mild support from the risk-on market sentiment. However, GBP investors exercised caution ahead of Tuesday’s UK employment report, which is expected to influence the Pound’s performance in the coming days.

Key Events to Watch: RBA Decision and UK Labour Market Report
Looking ahead, Tuesday’s RBA interest rate decision is expected to be the primary driver of the GBP/AUD exchange rate.

If the RBA signals a rate cut or adopts a dovish stance, the Australian Dollar could weaken, pushing GBP/AUD higher.
Conversely, if the central bank maintains a hawkish outlook, the Aussie may strengthen, applying downward pressure on GBP/AUD.
Meanwhile, the UK labour market report will also be closely monitored by GBP traders. If the data reveals:

A rise in unemployment and weaker job growth, Sterling could struggle.
However, if wage growth accelerates, it might provide some support for GBP as it could influence future Bank of England (BoE) interest rate decisions.
GBP/AUD Forecast: Potential for Increased Volatility
With two major economic events unfolding, GBP/AUD is likely to experience heightened volatility in the short term. The direction of the pair will largely depend on the RBA’s monetary policy outlook and how the UK labour data shapes market sentiment.

Traders should prepare for potential fluctuations as both central bank policy expectations and employment data take center stage in influencing GBP/AUD exchange rate movements.