Currency Charts: GBP to AUD

The pairing of two currencies (British pound and Australian dollar) (GBP / AUD) is a well-known trading pair in the financial market that represents a significant amount of daily trading. This is a combination that is popular among veteran traders and newbies. The exchange rates of the pair are strongly influenced by the correlation between the two main world economies: the UK and Australia.

Historical development of the GBP/AUD pair

The pound sterling dates back to about 775. It turned into its modern form after the decimal fraction in 1971. Today, it is the fourth most traded currency in the financial market and represents a significant number of daily transactions throughout the world.

The Australian dollar was preceded by the Australian pound in the 1960s. Australia decided to replace the old imperial system and move forward using AUD. Since the country is so close to the Asian continent, imports and exports between the two countries greatly influenced AUD.

Often, the Australian dollar is called the risk currency because of its interest rates at a relatively high level and correlation with global stock markets. The British pound depreciated against the Australian dollar after 2008 and started to make a significant rebound only in 2013. This was made possible due to lower economic growth in China and a slowdown in the global commodity supercycle of the mining industry.

What factors influence GBP/AUD?

The Forex financial market is available 24 hours a day, but trading in the UK, in particular, is starting from 8:00 in the morning and slows down from 5:00 in the evening. Of course, there will be periods during the day when this currency pair shows higher volumes, but, as a rule, this is around large market announcements.

A significant factor that affects the value of the pound sterling is the overall effectiveness of the UK economy. There are three reports of gross domestic product (GDP), which are published as follows; Preliminary GDP, revised GDP and final GDP. Traders and investors follow these reports, trying to determine the future movement of the market.

The monetary policy adopted by the Bank of England (BOE) also influences the price of the pound sterling. Whenever the Bank of England believes that inflation will grow too fast, they will use monetary policy tools to try to control the growth. During these procedures, interest rates may rise, which is another factor that traders take into account when analyzing the market and possible future direction for the GBP/AUD pair.

When trading AUD, many factors of politics and economics come into play. A particularly important point to pay attention to is the Australian import and export industry. For decades, the price of the Australian dollar remained high, thanks to the successful export of commodities such as coal, iron ore and a number of others.

Obviously, the available data on the current economic situation of the country is always useful for traders. The Reserve Bank of Australia plays a central role in determining the value of an AUD at any given time. Another financial point to consider is the exceptionally low interest rates on Australian government debt.

How to trade CFDs on GBP/AUD

Investors can exchange a pound for the Australian dollar (GBP / AUD) or trade with a Forex contract, alternatively, they can exchange a contract for difference (CFD) for a specific currency pair and speculate on the price difference.

CFD is a financial instrument, usually between a broker and an investor, when one party agrees to pay another difference in the value of the security between the beginning and the end of the contract. A trader can hold a long position (assuming the price goes up) or a short position (assuming the price falls). This is considered a short-term investment or trade, since CFDs are typically used for a limited period of time.

For example, to trade the GBP/AUD currency pair using CFD, the traders examine the direction of the underlying asset. If they think that the pound will be more expensive, then they need to open a long position by buying CFD. If they think that the pound sterling will lose value against the Australian dollar, it is better to open a short position selling CFDs.

So, GBP/AUD is a solid pair with two currencies with good stability. It is clear that this situation may change at any time, but for the most part, these two currencies are considered reliable. Many investors who seek to diversify their portfolios prefer to trade currency pairs, such as GBP/AUD, with the highest potential that they can offer.

Something went wrong