GBP/AUD

The GBP/AUD represents the current valuation of the Great British Pound (GBP) against the Australian dollar (AUD).

It is a pairing that is useful both in forex trading and for people looking to purchase foreign currency to spend in Australia.

As two of the world's most powerful economies, the axis has a major influence on investor activity.

The pair has been embroiled for most of Australia's history as the AUD (and Australian pound before 1966) has long been seen as a good indicator to the strength of the GBP (also known as sterling), due to the historical associations between the two countries.

Until 1946, the Australia central bank fixed its rate of exchange to another the British pound currency, in investor terms this is know as being a peg. Since December 1983, the Australian government has floated the Australian dollar, meaning that its value is no longer managed by reference to the GBP or any foreign currency.

Now the AUD is the sixth most traded currency in forex trading markets accounting for around five per cent of all deals, while the British pound is fourth in the list.

Historically investors see the AUD as a relatively stable forex trading option, as there is a perceived lack of government intervention in the market. Another of its big advantages is the chance it offers to diversify a portfolio as it has a much bigger exposure to Asian economies and the commodities cycle than sterling.

Currently, Austalia's mining industry is protecting it from much of the global economic downturn seen in other country's around the world, including the UK

The AUD - also denoted as A$ - is the official currency of the Commonwealth of Australia, which includes lands such as Christmas Island, Cocos Islands and the independent Pacific island states.

It is colloquially known as the Aussie or the Pacific Peso.