GBP-AUD Trading

GBPAUD is the ticker symbol for the British pound to Australian dollar exchange rate. The pound sterling and the Australian dollar are considered major currencies, but the GBPAUD is regarded as a minor pair because it does not constitute the US dollar. Minor currency pairs are relatively less liquid and more volatile than major pairs. As such, minor currency pairs are traded with relatively wider spreads than the majors.

In the GBPAUD Forex rate, GBP is the base currency, whereas AUD is the quote currency. This means that at any given time, the price of GBPAUD represents the amount of Australian dollars it would take to exchange for one unit of the pound sterling (1 GBP to AUD).

History of the GBPAUD

The GBP to AUD combines two major currencies. The GBP is the 4th most traded currency in the world (behind only the USD, EUR, and JPY).

Whereas AUD is the 5th most traded.

The pound sterling is the United Kingdom and British Overseas Territories’ official currency and UK Crown Dependencies. At least eight nations and territories worldwide have also pegged their currencies to the pound sterling. Nicknamed the ‘Quid’, the pound sterling is considered the oldest currency globally. Its history is as rich as the global conquests of the traditional British Empire, and it remains one of the most significant currencies to date. As early as 775AD, the pound was already introduced as an equivalent of 1 pound of silver. In 1489, the first pound coin appeared, and following England’s naval defeat to France in 1694, pound notes, produced by the newly formed Bank of England, started circulating. In the early 18th century, the pound’s value began to be referenced to gold’s weight rather than silver. In the 19th century, the gold standard essentially became official throughout Europe, and the UK also adopted it. The country, however, suspended the gold standard so that it could support its war efforts during World War I. After the war, it briefly returned to the gold standard, but the outbreak of World War II saw the country peg its currency. The peg was collapsed in the 1970s, and the pound sterling is now a freely floated currency. Fundamental events that have significantly influenced its value include the 2008 Great Recession and the 2016 Brexit.

On its part, the Australian dollar was introduced in 1966 as the country moved towards decimalization. It replaced the Australian pound that was initially introduced in 1910. The Australian pound was similar to the pound sterling system – it was divided into 20 shillings, further divided into 12 pence. The decimalized Australian dollar is divided into 100 cents. At inception, two units of the new Australian dollar equalled 1 unit of the old Australian pound.

The AUD is part of a group nicknamed ‘Comdolls’ in the forex markets- a reference to commodity dollars. This is because Australia is a major global producer and exporter of iron ore, coal, and other minerals and metals. Additionally, the country is a major trading partner of China and the US, two of the leading global economic giants. This has propelled the AUD to become one of the most crucial worldwide finance and trading currencies. In recent years, major fundamental events that have influenced the AUD include the 2015/16 energy recession and the 2020 Great Lockdown due to the coronavirus pandemic.

GPB/AUD Historical Price Performance

GBP/AUD traded around 2.60 at the turn of the millennium. It made a brief rally towards 3.10 before embarking on a long-term downtrend that bottomed out around 1.43 in early 2013. The subsequent correction saw prices rise above 2.22 in late 2015 before drifting lower again. In recent years (as of February 2022), GBPAUD has traded mainly between 1.70 and 2.10.

Major Bodies Influencing the GBPAUD – GBP to AUD Trading 

Here are some of the factors to look out for when GBPAUD trading:

Bank of England (BoE)

The BoE is the central bank of the UK. The bank administers and manages the GBP. It releases interest rates and accompanying rate statements every month. BOE has in recent years been very active in the forex markets, and GBP traders closely monitor its actions.

Reserve Bank of Australia (RBA)

The RBA is the central bank of Australia, and it has the mandate to achieve stability for the AUD as well as promote economic prosperity for the country. The bank meets on the first Tuesday of every month (except January) to set the cash rate and deliver its monetary policy stance. These meetings and other functions of the RBA have an immense influence on the AUD.

Australian Bureau of Statistics (ABS)

This is Australia’s national statistics agency. It is tasked with producing and publishing important economic reports and statistics. The essential indicators released by the ABS that can influence the price direction of AUD include the unemployment rate, Consumer Price Index, and Trade Balance.

GBPAUD Correlations

Correlations are an essential strategy when trading forex. They help traders detect opportunities in different currency pairs and minimize the risk of volatility in a portfolio. GBPAUD has displayed positive correlations with pairs such as GBPNZD, GBPCHF, EURNZD, NOK/SEK, and CADCHF. On the other hand, GBPAUD has shown to be negatively correlated with pairs such as the NZDCAD, AUDCAD, AUDSGD, CHFSGD, and NZDCHF.

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