The Pound-Australian Dollar rate could edge higher if Chinese inflation disappoints and Australian sentiment stays weak, while rising gilt yields may cap Sterling. The Pound to Australian Dollar (GBP/AUD) exchange rate traded in a narrow range on Tuesday as a decline in sentiment across the Australian economy has curbed AUD's recent bullish momentum.
At the time of writing, GBP/AUD was trading at AU$1.8763. Virtually unchanged from the start of Tuesday’s opening levels.
Latest — Exchange Rates:
Pound to Australian Dollar (GBP/AUD): 1.875775 (-0.02%)
Pound to Dollar (GBP/USD): 1.353466 (-0.09%)
DAILY RECAP:
The Australian Dollar (AUD) stalled on Tuesday, amid a deterioration in domestic consumer and business confidence.
The Westpac-Melbourne Institute Consumer Sentiment Index fell 5.2% in September to 84.4, reversing almost all of the 6% improvement recorded in August, with the survey pointing to growing concerns over household finances.
Businesses were similarly downbeat. The latest NAB Business Survey showed confidence falling two points to -8 in August, while business conditions dropped five points to -1 – the first negative reading since the COVID pandemic.
This has robbed the 'Aussie' of some of its recent momentum, after being propelled to a multi-month high by Reserve Bank of Australia (RBA) policy speculation after AUD investors grew increasingly hawkish in pricing in further monetary tightening from the bank this year.
The Pound (GBP) was muted on Tuesday as a fresh rise in oil prices fuelled renewed concerns over inflation and pushed UK government bond yields higher.
Brent crude climbed towards $100 a barrel on Tuesday morning after attacks on Saudi energy infrastructure intensified fears over disruptions to global energy supplies, adding to the inflationary pressures already weighing on markets.
The jump in energy prices prompted a broader sell-off in government bonds, with 10-year gilt yields edging higher after already reaching multi-year highs during the recent bout of market turmoil.
This added to concerns over the UK's borrowing costs and the amount of fiscal headroom available to Chancellor John Healey ahead of his October Budget.
Near-Term GBP/AUD Forecast: Recovery in Chinese Inflation to Strengthen the 'Aussie'? Looking ahead to the middle of the week, the next catalyst of movement for the Pound to Australian Dollar exchange rate is likely to be the publication of China's latest inflation figures.
The Australian dollar's status as a proxy for China could see the 'Aussie' supported if August's data shows prices began to accelerate again, after a protracted run of month-on-month disinflation.
Meanwhile, UK economic data remains in short supply through the middle of the week, which is likely to leave movement in the Pound to be driven by wider market trends.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
The Pound-Australian Dollar could remain under pressure if UK GDP disappoints, although weaker Australian confidence data may offer Sterling some relief. The Pound to Australian Dollar (GBP/AUD) exchange rate slumped to a fresh three-month low last week as the 'Aussie' continued to be underpinned by hawkish Reserve Bank of Australia (RBA) interest rate speculation.
At the time of writing, GBP/AUD was trading at AU$1.8796. Down roughly 0.5% from the start of last week’s session.
Latest — Exchange Rates:
Pound to Australian Dollar (GBP/AUD): 1.877176 (+0.05%)
Pound to Dollar (GBP/USD): 1.351857 (+0.01%)
DAILY RECAP:
The Australian Dollar (AUD) initially faced some headwinds last week as the turmoil in the global bond market prompted investors to limit exposure to risk-sensitive currencies.
However, the ‘Aussie’ subsequently staged a strong recovery, climbing to fresh multi-month highs against many of its peers following the publication of Australia's latest GDP figures.
According to data published by the Australian Bureau of Statistics (ABS), Australia's economy expanded by 0.4% in the second quarter, exceeding forecasts for a 0.3% expansion, while annual growth accelerated to 2.1% – also ahead of expectations for a 1.8% increase.
The data reinforced RBA rate hike expectations, with the odds of another 25-basis-point rate hike at the central bank’s September meeting rising to around 70%, up from roughly 50% before the GDP figures were released.
The Pound (GBP) faced significant resistance last week, with the currency being hit particularly hard by the sell-off across global bond markets.
UK gilts came under particularly heavy pressure, with the yield on 10-year government bonds climbing above 5.25% and briefly reaching its highest level since 2008, while 30-year gilt yields approached 5.9%, marking their highest level since 1998.
The moves reflected the broader global bond sell-off, but concerns over the UK's fiscal position added to the pressure on Sterling, with GBP investors concerned that the increase in borrowing costs could further erode the fiscal headroom available to Chancellor John Healey ahead of his first Autumn Budget.
Near-Term GBP/AUD Forecast: Soft UK GDP Print to Sap Sterling Sentiment? Turning to this week's session, the Pound to Australian Dollar exchange rate may come under pressure with the publication of the UK's latest GDP figures.
Consensus estimates predict month-on-month GDP growth will have slowed in July, which could weigh on Sterling as it further complicates the Bank of England's (BoE) policy outlook.
Meanwhile, Australia's latest consumer and business confidence figures may weigh on the 'Aussie' this week if they point to a deterioration in morale.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
Pound-Australian Dollar could remain under pressure if risk appetite stays firm, although a more hawkish Bailey could help Sterling recover. The Pound Australian Dollar (GBP/AUD) exchange rate hit a three-month low on Thursday as a risk-on mood swept markets.
At the time of writing, GBP/AUD was trading at AU$1.8797, having bounced off a low point of AU$1.8797.
Latest — Exchange Rates:
Pound to Australian Dollar (GBP/AUD): 1.877752 (-0.22%)
Pound to Dollar (GBP/USD): 1.352779 (+0.33%)
DAILY RECAP:
The Australian Dollar (AUD) softened slightly during Thursday’s Asian trading session following downbeat domestic trade data.
Australia’s latest balance of trade showed a narrowing surplus in July. Both exports and imports contracted, with the former declining at a sharper pace.
However, the risk-sensitive ‘Aussie’ was cushioned by an upbeat market mood, limiting losses.
When the European session started, AUD was able to attract fresh support and firm against some of its weaker peers.
Meanwhile, the Pound (GBP) was subdued on Thursday as markets digested the UK’s final services PMI.
Although growth in the UK’s vital services sector hit a four-month high in August, the final reading was revised slightly lower than the preliminary estimate. The PMI rose from 52.1 to 52.5, rather than 52.8. This weaker-than-expected result stifled Sterling’s upside potential.
Meanwhile, GBP investors seemed somewhat perturbed by the recent surge in UK government borrowing costs, after bond yields struck a 19-year high on Wednesday. This also limited the Pound’s appeal.
Near-Term GBP/AUD Forecast: Central Bank Expectations to Drive Movement? Looking forward, on Friday GBP investors will likely focus on a speech from Bank of England (BoE) Governor Andrew Bailey. If Bailey maintains his cautious tone about the need for interest rate hikes, Sterling could stumble.
However, if the BoE chief starts to sound more concerned about the upside risks to inflation then the Pound could catch bids.
Meanwhile, Australian economic data is thin on the ground, potentially leaving the ‘Aussie’ to trade on global risk dynamics.
US economic data could play a big part in the market mood. If a weak non-farm payrolls report dampens Federal Reserve interest rate hike bets, an upbeat mood could lift AUD.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
Pound-Australian Dollar could slip back if Australian GDP reinforces RBA hike expectations, although renewed risk aversion may keep the Aussie under pressure. The Pound to Australian Dollar (GBP/AUD) exchange rate trended higher on Tuesday as a cautious market mood weakened demand for risk-sensitive assets like the 'Aussie'.
At the time of writing, GBP/AUD was trading at AU$1.8958. Up around 0.3% from the start of Tuesday’s opening levels.
Latest — Exchange Rates:
Pound to Australian Dollar (GBP/AUD): 1.889968 (+0.03%)
Pound to Dollar (GBP/USD): 1.352508 (-0.17%)
DAILY RECAP:
The Australian Dollar (AUD) faced modest selling pressure on Tuesday as renewed military tensions between the US and Iran triggered a deterioration in market risk appetite.
The two sides exchanged strikes for the first time in several weeks, quashing hopes for a diplomatic solution to the crisis.
The escalation triggered a fresh rise in oil prices and prompted investors to adopt a more defensive stance.
However, the pressure on the Australian Dollar was partially offset by some encouraging Chinese economic data. China’s private RatingDog Manufacturing PMI rose to 51.5 in August from 50.9 in July, comfortably exceeding expectations and likely feeding greater demand for Australian exports.
While able to appreciate against its more risk-sensitive currencies, the Pound (GBP) traded in a relatively narrow range against most of its other peers on Tuesday as UK markets reopened following Monday’s bank holiday to a sharp rise in government borrowing costs.
UK 10-year gilt yields climbed to around 5.24% - their highest level since 2008 - as rising oil prices and renewed concerns over inflation fuelled expectations that central banks may need to maintain tighter monetary policy.
Elsewhere, an upwards revision to the UK's manufacturing PMI in August appeared to have little material impact on Sterling.
Near-Term GBP/AUD Forecast: Steady GDP Print to Lift the 'Aussie'? Turning to mid-week trade, the Pound Australian Dollar exchange rate may be pressured by the publication of the UK's latest GDP figures.
Wednesday's data is expected to show the Australian economy continued to expand at a steady pace of 0.3% in the second quarter of 2026.
While below the blistering pace of growth set at the end of 2025, the expansion should still be enough to underpin bets that the Reserve Bank of Australia (RBA) will deliver an interest rate hike later this month.
Meanwhile, in the absence of any notable UK economic indicators, any movement in the Pound through the middle of the week is likely to be dictated by wider market trends.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
The Pound-Australian Dollar rate could rebound if Australian GDP stalls, although firm RBA rate hike expectations may keep the Aussie supported. Last week saw the Pound to Australian Dollar (GBP/AUD) exchange rate strike its worst levels since late June amid a notably hawkish uptick in Reserve Bank of Australia (RBA) interest rate hike bets.
At the time of writing, GBP/AUD was trading at AU$1.8882. Down roughly 0.8% from the start of last week’s session.
Latest — Exchange Rates:
Pound to Australian Dollar (GBP/AUD): 1.889531 (-0.01%)
Pound to Dollar (GBP/USD): 1.3534 (-0.46%)
DAILY RECAP:
The Australian dollar (AUD) initially softened last week, as geopolitical uncertainty sapped market risk appetite.
Investors were rattled by fresh trade war fears as the US slapped new tariffs on Canada, as well as the threat of new US economic sanctions on Iran and the implications for US-China relations.
After only finding fleeting gains following the release of the minutes from the RBA's August policy meeting, the 'Aussie' then received a shot in the arm with the publication of Australia's latest consumer price index.
Data published by the Australian Bureau of Statistics (ABS), showed that while headline inflation cooled from 3.8% to 3.5% year-on-year in July, this was ahead of forecasts it would fall as low as 3.3%.
The hotter-than-expected CPI print turbocharged RBA rate hike bets, which in turn drove significant demand for the 'Aussie' through the second half of the week.
The Pound (GBP) opened last week's session on stable footing, buoyed by a report claiming that the UK's productivity outlook is improving faster than official figures suggest.
However, Sterling struggled to sustain this modest support, as a lull in UK economic releases left Sterling vulnerable to the movement of its peers.
Adding to the pressure on the pound were fresh cost-of-living concerns, as the news that the UK's energy price cap would rise to a three-year high from October.
Near-Term GBP/AUD Forecast: Stalling GDP to Looking to the week ahead, the main catalyst of movement for the Pound to Australian Dollar exchange rate will likely be the publication of Australia's second quarter GDP figures.
Consensus estimates predict growth stalled in Q2, which could temper some of the more hawkish RBA bets and pull the 'Aussie' lower in mid-week trade.
Also of note to AUD investors will be Australia's latest trade data, which may also exert pressure on AUD exchange rates if it reports a slowdown in exports in July.
Meanwhile, the UK's data calendar looks sparse again this week, with only August's finalised services PMI potentially offering any real impetus for Sterling, which will otherwise be likely to driven by wider currency trends.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
Pound-Australian Dollar could remain under pressure if RBA minutes revive rate hike bets, while a quiet UK calendar leaves Sterling reliant on wider market trends. The Pound to Australian Dollar (GBP/AUD) exchange rate traded in a wide range last week amid uneven UK economic data and a shifting market mood.
At the time of writing, GBP/AUD was trading at AU$1.9067. Down roughly 0.2% from the start of last week’s session.
Latest — Exchange Rates:
Pound to Australian Dollar (GBP/AUD): 1.90266 (-0.72%)
Pound to Dollar (GBP/USD): 1.36445 (+0.01%)
DAILY RECAP:
The Pound (GBP) traded in a wide range this week as a barrage of UK economic releases delivered a mixed picture of the domestic economy, leaving investors uncertain over the outlook for Bank of England (BoE) monetary policy.
The week began with softer-than-expected employment data, which showed unemployment holding at 4.9% while wage growth also slowed, with private sector pay increasing at its weakest pace since late 2020.
Sterling remained muted with the subsequent release of the UK's consumer price index, as an uptick in inflation failed to lift expectations for a BoE rate hike later in the year.
Attempts by the Pound to recover in the latter half of the week then proved short-lived, with GBP exchange rates being undermined by a sharp contraction in retail sales, and struggling to benefit from positive PMIs.
The Australian dollar (AUD) got off to a positive start last week, with the currency benefitting from positive risk flows and a surprise improvement in domestic consumer confidence.
The 'Aussie' then faced notable headwinds in the middle of the week, initially giving up ground in response to weak domestic wage data.
The AUD selloff then gathered pace with the publication of Australia's latest jobs report as a shock contraction in the labour market last month tempered bets for another Reserve Bank of Australia (RBA) interest rate hike later in the year.
However, the Australian Dollar was then about to bounce back again at the very end of the week as widespread weakness in the US Dollar helped to bolster market risk appetite.
Near-Term GBP/AUD Forecast: Hawkish RBA Minutes to Lift the 'Aussie'? Looking to the week ahead, a quiet data calendar will see the minutes from the RBA's latest policy meeting act as the main catalyst of movement for the Pound to Australian Dollar exchange rate.
If the minutes strike a hawkish tone and signal that policymakers are likely to support further tightening, it could help to revive RBA rate hike bets and lift the 'Aussie'.
Meanwhile, UK economic releases are in short supply this week, likely leaving movement in the Pound to be dictated by wider market trends.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
Pound-Australian Dollar could struggle to hold gains if UK retail sales and PMI data disappoint, although softer Australian business surveys may limit AUD support.
The Pound to Australian Dollar (GBP/AUD) exchange rate appreciated on Thursday in response to a weaker-than-expected Australian jobs report.
At the time of writing, GBP/AUD was trading at AU$1.9134. Up around 0.2% from the start of Thursday’s opening levels.
Latest — Exchange Rates:
Pound to Australian Dollar (GBP/AUD): 1.915687 (+0.33%)
Pound to Dollar (GBP/USD): 1.362765 (+0.21%)
DAILY RECAP:
The Australian Dollar (AUD) fell through Thursday’s Asian trading session after Australia’s latest employment figures pointed to a sharper-than-expected cooling in the labour market.
Australia’s labour market unexpectedly shed 15,800 jobs in July, contrasting with forecasts for an increase of around 15,000. The deterioration was accompanied by a rise in the unemployment rate to 4.5%, up from 4.4% in June and its highest level since late 2021.
The unexpectedly soft data prompted some AUD investors to adjust their expectations for further monetary tightening from the Reserve Bank of Australia (RBA), with another rate hike later in the year now seen more as a lineball call.
While able to edge higher against the Australian Dollar, the Pound (GBP) traded sideways against most of its other peers on Thursday, with GBP investors taking a breather following recent high-tier data.
There's been a mixed response to this week's data so far, with the UK's latest inflation and employment figures failing to shift expectations for a potential interest rate hike from the Bank of England’s (BoE) later in the year.
Near-Term GBP/AUD Forecast: Weak Retail Sales and PMI Data to Sap Sterling?
Looking ahead, the Pound Australian Dollar exchange rate may come under pressure on Friday, with the final UK economic releases of the week.
Up first is the UK's latest retail sales data, which is expected to report a contraction in consumer spending in July.
This will be followed by August's preliminary PMIs, which could further undermine Sterling if they point to a slowdown in UK private sector activity this month.
In the meantime, Australia's own PMIs could pile more pressure on the 'Aussie' as economists forecast a moderation in Australia's private sector this month.
Exchange Rates UK Research
Our currency coverage draws on live market data, official economic releases and published bank research.
The Pound-Australian Dollar could recover if UK inflation revives BoE rate hike bets, while softer Australian wage growth may weigh on the Aussie. The Pound to Australian Dollar (GBP/AUD) exchange rate was subdued on Tuesday as markets digested the UK's latest employment figures.
At the time of writing, GBP/AUD was trading at AU$1.9045. Down slightly from the start of Tuesday’s opening levels.
Latest — Exchange Rates:
Pound to Australian Dollar (GBP/AUD): 1.9045 (-0.05%)
DAILY RECAP:
The Pound (GBP) faced headwinds on Tuesday, as the UK's latest jobs report raised concerns over the strength of the UK labour market.
According to data published by the Office for National Statistics (ONS), the UK's unemployment rate held at 4.9% in June, above forecasts it would drop to 4.8% as the UK economy added almost half the number jobs added in May.
The accompanying wage growth figures also sapped Sterling sentiment as average earnings slowed from 4.4% to 4.1%.
The soft employment data, particularly the slowdown in wage growth, came as a disappointment to GBP investors as it underpins expectations the Bank of England’s (BoE) may sit out the current hiking cycle.
The Australian Dollar (AUD) fluctuated on Tuesday, amid shifting risk sentiment and upbeat domestic data.
AUD exchange rates initially firmed through Tuesday’s Asian trading session, after Australian consumer confidence improved more than expected this month and even stuck its highest level since March.
However, the 'Aussie' was forced to relinquish the bulk of these gains by the start of the European session, with the high-yield currency struggling to sustain its support as rising energy prices and geopolitical uncertainty sapped market risk sentiment.
Near-Term GBP/AUD Forecast: Rising Inflation to Revive Sterling? Looking ahead to the middle of the week, the Pound Australian Dollar exchange rate may catch bids with the release of the UK's consumer price index.
July's CPI figures are forecast to report inflationary pressures began to build again in July, after previously easing for three consecutive months.
This could push Sterling higher if it keeps hopes alive for a BoE rate hike before the end of 2026.
In the meantime, the release of Australia's latest wage price index could dent the 'Aussie' if a moderation of wage growth in the second quarter is seen as weakening the case for further interest rate hikes from the Reserve Bank of Australia (RBA).
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
The Pound-Australian Dollar rate could push higher if strong UK jobs and inflation data lift BoE rate expectations, while softer Australian employment may weigh on the Aussie.
The Pound to Australian Dollar (GBP/AUD) exchange rate wavered last week amid a shifting market mood and thin trading conditions.
At the time of writing, GBP/AUD was trading at AU$1.9124. Up roughly 0.2% from the start of last week’s session.
Latest — Exchange Rates:
Pound to Australian Dollar (GBP/AUD): 1.910733 (+0.02%)
Pound to Dollar (GBP/USD): 1.354004 (+0.05%)
DAILY RECAP:
The Australian dollar (AUD) got off to a soft start last week amid Chinese disinflation concerns and a nervous market mood.
The 'Aussie' then hit its worst levels of the week immediately following the Reserve Bank of Australia (RBA) latest policy meeting and its decision to leave interest rates on hold.
These losses were short-lived, however, with AUD exchange rates rebounding following some particularly hawkish remarks from RBA Governor Michele Bullock during her post-meeting press conference, in which she suggested it is 'quite possible' the bank will need to tighten policy again.
The second half of the week then saw the Australian Dollar left adrift as ongoing uncertainty in the Middle East weighed on market risk sentiment.
The Pound (GBP) initially opened last week on strong footing, rallying against the majority of its peers through the first part of the session.
However, with no clear catalyst underpinning these gains, Sterling struggled to sustain these gains for long and was left to languish through the middle of the week amid a prolonged lull in UK economic indicators.
The second half of the week, then broke the long drought in data with the publication of the UK's latest GDP figures.
While data published by the Office for National Statistics (ONS) showed the UK economy expanded by a healthy 0.4% in the second quarter, it failed to inspire much enthusiasm among GBP investors, with Sterling stumbling as many questioned whether this momentum could be sustained into the latter part of the year.
Near-Term GBP/AUD Forecast: Strong UK Data to Lift Sterling?
Looking ahead, a glut of high-impact UK economic indicators are set to drive movement in the Pound to Australian Dollar exchange rate this week.
The most influential releases will likely be the UK's latest inflation and employment figures as these will likely have the greatest impact on Bank of England (BoE) interest rate expectations.
If this week's data is seen as encouraging the BoE to tighten monetary policy in the coming months, it could lift Sterling.
Meanwhile, the primary focus for AUD investors will be on the publication of Australia's own jobs report.
Analysts forecast employment growth will have moderated last month after spiking in June, which, coupled with a rise in the jobless rate, could dampen RBA rate hike bets and sap the 'Aussie'.
Exchange Rates UK Research
Our currency coverage draws on live market data, official economic releases and published bank research.
Pound-Australian Dollar can hold a firm tone if risk appetite stays fragile, although hawkish RBA rhetoric could limit any move back above AU$1.91. The Pound to Australian Dollar (GBP/AUD) exchange rate edged higher on Thursday as a risk-off market mood weighed on the ‘Aussie’, while the latest UK GDP figures left Sterling broadly steady.
At the time of writing, GBP/AUD was trading around AU$1.9123, marginally higher on the day.
Latest — Exchange Rates:
Pound to Australian Dollar (GBP/AUD): 1.910309 (-0.03%)
Pound to Dollar (GBP/USD): 1.348536 (-0.09%)
DAILY RECAP:
The Pound (GBP) was relatively muted on Thursday, although it managed to hold an advantage against weaker rivals after the UK’s latest GDP figures met expectations.
Data from the Office for National Statistics showed the UK economy expanded by 0.4% in the second quarter, down from 0.6% in the first quarter but still a respectable pace of growth.
Sterling drew only limited support from the release as the figures matched forecasts and some of the strength was linked to temporary and seasonal factors. The World Cup and warm summer weather helped lift activity in June.
There was also some caution over the outlook for the second half of the year. A number of economists warned that growth could slow if elevated energy prices and Middle East tensions keep inflation pressures high.
Meanwhile, the Australian Dollar (AUD) softened as a cautious market mood undermined demand for the risk-sensitive currency.
Investor sentiment remained fragile as tensions in the Middle East continued to simmer. Iran’s insistence that vessels require its permission to pass through the Strait of Hormuz, alongside threats to prolong the conflict with the US, kept markets on edge.
With hopes for a ceasefire and a full reopening of shipping routes fading, investors remained wary of holding higher-risk assets, leaving the ‘Aussie’ under pressure.
Near-Term GBP/AUD Forecast: Can Bullock’s comments steady the Australian Dollar? Looking ahead, a speech from Reserve Bank of Australia Governor Michele Bullock could influence the Australian Dollar during Friday’s Asian session.
Bullock struck a relatively hawkish tone after the RBA left interest rates on hold earlier this week. If she repeats that message, the ‘Aussie’ could find support and limit GBP/AUD upside.
For Sterling, UK data is thin on the ground, which may leave the Pound trading without a strong independent driver.
That means wider risk sentiment could remain the main influence on the pairing. If Middle East tensions continue to sap confidence, GBP/AUD may stay supported. A brighter market mood, however, could help the Australian Dollar recover.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
Pound-Australian Dollar could stay near AU$1.91 if UK GDP supports Sterling, although hawkish RBA signals may keep the ‘Aussie’ well underpinned. The Pound to Australian Dollar (GBP/AUD) exchange rate traded in a narrow range on Tuesday, after early volatility triggered by the Reserve Bank of Australia’s latest policy decision faded.
At the time of writing, GBP/AUD was trading around AU$1.9146, little changed on the day.
Latest — Exchange Rates:
Pound to Australian Dollar (GBP/AUD): 1.91256 (-0.13%)
Pound to Dollar (GBP/USD): 1.350731 (-0.03%)
DAILY RECAP:
The Australian Dollar (AUD) saw some volatility during Tuesday’s Asian session after the Reserve Bank of Australia left interest rates unchanged at 4.35%, in line with market expectations.
The ‘Aussie’ initially dipped after the announcement, but quickly recovered as RBA Governor Michele Bullock struck a hawkish tone in her post-meeting remarks.
Bullock indicated that the bank had discussed the possibility of another rate rise and signalled that further tightening remains possible if inflation risks persist.
She said: “And we will go again if we need to. And I think personally that it is quite possible we might need to go, but we will wait and see what the data tells us.”
This helped AUD steady after the initial wobble, with investors now looking to upcoming Australian data for clues as to whether inflation pressures are beginning to feed more clearly into the wider economy.
Meanwhile, the Pound (GBP) held firm on Tuesday after a report showed UK consumer confidence climbed to its highest level in almost two years in July.
Barclays’ latest consumer spending survey suggested households were feeling more secure in their finances and job prospects, with warmer weather and the World Cup also helping to lift discretionary spending.
Even so, Sterling struggled to generate stronger momentum, with traders largely waiting for Thursday’s UK GDP release for clearer direction.
Near-Term GBP/AUD Forecast: Can UK GDP lift Sterling above AU$1.91? Looking ahead, the next major catalyst for the Pound to Australian Dollar exchange rate is likely to be Thursday’s UK GDP report.
If the figures show the UK economy expanded at a reasonably healthy pace in the second quarter, Sterling may find fresh support and GBP/AUD could attempt to push higher.
However, any disappointment in the GDP release may leave the Pound vulnerable, particularly against an Australian Dollar that remains supported by hawkish RBA expectations.
Markets will also keep an eye on another speech from RBA Governor Bullock. If she reiterates the case for keeping the door open to further rate hikes, the ‘Aussie’ could stay underpinned through the second half of the week.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
Softer inflation lowers urgency for immediate RBA hike Markets still favour one more hike this cycle Renewed energy price strength delivers Aussie terms-of-trade tailwind EUR/AUD and GBP/AUD trade setups in focus A likely hawkish hold from the RBA and renewed geopolitical tensions in the Gulf driving energy prices higher have swung the fundamental backdrop in favour of the Aussie relative to the European crosses.
Inflation undershoots, unemployment overshoots The RBA clearly thought there was more momentum in the economy in May than what eventually showed up in the data. It overestimated the inflationary pulse and underestimated the increase in unemployment, with both headline and trimmed mean inflation undershooting its May forecasts while unemployment overshot.
Source: FOREX.com
At face value, that suggests the path towards getting inflation back to acceptable levels may be a little more advanced than the Bank thought three months ago. But inflation is still too high, which is why the risk of another hike has not been completely snuffed out.
Markets push tightening risk further out
Source: TradingView, FOREX.com
While there is little probability attached to a hike today, making this meeting look very much like a placeholder with a hawkish hold, go further out the curve and the risk of tightening is still there. By November, when the next set of forecasts after today will be released, markets are basically at a coin flip on another hike. That lifts to 82% by February next year.
So while the amount of tightening priced by traders has been pared back relative to what underpinned the RBA’s May forecasts, the market still thinks there is a decent chance the Bank will need to go again this cycle.
Source: FOREX.com
The question is what that means for the RBA’s updated forecasts for GDP growth, unemployment and inflation released today. My suspicion is that the slight unwind in hawkish pricing will not have a particularly meaningful impact, with outcomes similar to those forecast in May.
Source: FOREX.com
Spending resilience meets housing weakness One area where the Bank’s language may be upgraded is household spending. At the June meeting, the RBA said it was “slowing as expected”, but recent data has been quite strong, particularly in discretionary areas, questioning whether that view is still warranted.
However, that potential upgrade could be offset by the housing market, where the decline in house prices has accelerated and broadened since the Bank met six weeks ago. What had been weakness in some capital cities is now more widespread, potentially becoming a larger drag on household demand.
Given the data trend and potential statement tweaks, it’s very likely the RBA will retain the guidance used in July that it “will do what it considers necessary to achieve that outcome, including increasing the cash rate target further if required.” That basically gives the Bank room to sit comfortably for now while keeping the tightening option firmly on the table.
Terms of trade tailwinds favour the Aussie When it’s all said and done, I expect the RBA will be aiming to keep market pricing relatively unchanged, avoiding an unnecessary loosening in financial conditions that would make the task of reducing inflationary pressures more difficult. That points to the Aussie dollar continuing to be underpinned by hawkish rate expectations.
And when it comes to the European crosses, the Aussie also has the advantage of being a major energy exporter, meaning higher energy prices due to ongoing geopolitical tensions in the Gulf deliver a positive terms-of-trade shock, the exact opposite of what we see in Europe. When you throw energy insecurity into the mix, it points to tailwinds building for the Aussie relative to the European crosses.
EUR/AUD bears eye 1.6340 break
Source: TradingView
EUR/AUD looks heavy on the charts, sitting just above support at 1.6340. If the pair breaks beneath 1.6340 support and holds there, shorts could be set with a tight stop above the level for protection, targeting 1.6260, where the pair bottomed in July. Beyond that, a break of 1.6260 would open the door for a retest of 1.6130, where the price has bottomed and bounced on multiple occasions going back several years.
The message from the oscillators at this point is neutral. RSI (14) has been setting sequentially lower highs and now sits marginally below the neutral 50 level. MACD has also turned negative and is on the cusp of a bearish crossover. But neither indicator is providing a strong steer, placing more emphasis on price action.
GBP/AUD squeeze risk builds near 1.9150
Source: TradingView
While the fundamental backdrop favours downside for GBP/AUD, the price action warns of a potential squeeze and near-term topside break ahead of the RBA. The level in focus today is 1.9150, which has repeatedly acted as support and resistance in recent weeks. The pair is now squeezing up against that level while remaining within the broader uptrend running from the low set in late May.
With an engulfing candle printing on Monday, a clean break above 1.9150 could put the August 3 high at 1.9260 in play. Beyond that, resistance sits at 1.9350, with the 200-day simple moving average around 1.9370 and the March swing high at 1.9400 just above. If the pair breaks cleanly above 1.9150, longs could be set with a tight stop beneath the level for protection, targeting those upside levels.
Alternatively, if 1.9150 continues to cap gains, as has been the case over recent sessions, shorts could be set with a tight stop above the level, targeting a retest of the May uptrend, followed by 1.9004, the swing low set on July 28. Beyond that, 1.8945 comes into focus, having acted as resistance earlier this year.
Mirroring EUR/AUD, the oscillators are neutral for GBP/AUD. RSI (14) sits just above 50, while MACD is running parallel to the signal line around breakeven, placing more emphasis on price action for guidance.
The Pound to Australian Dollar (GBP/AUD) exchange rate ended Friday near 1.9189 after a volatile final week of July left the pair little changed for the month.
UK business surveys and Australian spending and trade figures will shape direction in the days ahead.
Latest — Exchange Rates:
Pound to Australian Dollar (GBP/AUD): 1.915246 (-0.19%)
Pound to Dollar (GBP/USD): 1.347555 (-0.05%)
WEEKLY RECAP:
The Pound to Australian Dollar exchange rate (GBP/AUD) endured a choppy final week of July, falling towards 1.90 before recovering above 1.92 and then easing into Friday’s close.
Pound Sterling strengthened after the Bank of England kept Bank Rate at 3.75%, with three Monetary Policy Committee members voting for an immediate increase.
However, Governor Andrew Bailey pushed back against suggestions that a September hike was taking shape.
MUFG judged the BoE’s communication “supportive” for Sterling, but said that deliberate pushback against rate-rise expectations limited the scope for further upside.
The Australian Dollar also finished the week firmly.
Australian inflation slowed more than expected during the second quarter, prompting markets to almost completely remove the prospect of an RBA hike at its August meeting.
Despite that repricing, the Australian Dollar reached a six-week high against the US Dollar. Broad Dollar weakness, positive risk appetite and demand linked to Australia’s role in the AI investment supply chain outweighed the softer domestic rate outlook.
Scotiabank described the Australian Dollar as an outperformer, although the reduced prospect of further RBA tightening leaves it more exposed to weaker domestic figures.
Near-Term GBP/AUD Forecast: Australian Spending and Trade Data in Focus For Pound Sterling, Monday’s final manufacturing PMI is followed by Wednesday’s services survey and Thursday’s construction PMI. Further weakness in construction would reinforce concerns over the UK growth outlook.
For the Australian Dollar, Monday brings the Melbourne Institute inflation gauge. Tuesday’s household spending report and ANZ job advertisements will offer fresh evidence on domestic demand and employment.
Thursday’s goods trade balance is forecast to remain in deficit, although the shortfall should narrow from A$3.02 billion to A$1.08 billion. Chinese trade figures on Friday will also be important for Australia’s export-sensitive currency.
Resilient UK surveys alongside weak Australian spending or trade data could lift GBP/AUD towards 1.94. Stronger Australian figures and supportive Chinese data would expose 1.90.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
Pound-Australian Dollar could extend gains if the Bank of England keeps the door open to higher rates after Australia's softer inflation weakens the Aussie. The Pound to Australian Dollar (GBP/AUD) exchange rate surged on Wednesday after weaker-than-expected Australian inflation sharply reduced expectations for another Reserve Bank of Australia interest rate hike.
At the time of writing, GBP/AUD was trading around AU$1.9161, up approximately 0.5% on the day.
Latest — Exchange Rates:
Pound to Australian Dollar (GBP/AUD): 1.920489 (-0.01%)
Pound to Dollar (GBP/USD): 1.335415 (-0.10%)
DAILY RECAP:
The Australian Dollar (AUD) tumbled through Wednesday's Asian session after Australia's latest inflation figures came in below expectations.
Official data showed annual consumer price inflation slowed to 3.9% in the second quarter, below forecasts that it would remain at 4.1%.
The weaker inflation reading prompted investors to further reduce expectations for additional Reserve Bank of Australia (RBA) policy tightening.
The ‘Aussie’ fell sharply as markets cut the implied probability of an August interest rate hike to the low single digits, with several major banks abandoning forecasts for near-term tightening.
Meanwhile, while the Pound (GBP) strengthened against the Australian Dollar, it traded in a relatively narrow range against most other major currencies as investors awaited Thursday's Bank of England (BoE) interest rate decision.
No policy changes are expected, leaving markets focused on the Bank's accompanying statement and any guidance from Governor Andrew Bailey.
Investors remain divided over whether the BoE could still raise interest rates later this year or instead keep policy unchanged before eventually resuming its easing cycle.
Near-Term GBP/AUD Forecast: Dovish BoE to Sink Sterling? Looking ahead, Thursday's Bank of England interest rate decision is expected to be the main driver of the Pound to Australian Dollar exchange rate.
If the BoE adopts a more dovish tone, Sterling could surrender much of Wednesday's gains and potentially retest recent lows against the Australian Dollar.
However, if policymakers warn that inflation risks are building again during the second half of 2026, expectations for another interest rate hike could strengthen and provide additional support for the Pound.
Meanwhile, any renewed escalation of tensions in the Middle East could continue to weigh on the risk-sensitive Australian Dollar through the second half of the week.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
Pound-Australian Dollar could struggle to extend gains unless the Bank of England strikes a hawkish tone, while Australian inflation may revive RBA rate hike bets. The Pound to Australian Dollar (GBP/AUD) exchange rate edged higher on Tuesday as mixed comments from Reserve Bank of Australia Governor Michele Bullock weighed on the ‘Aussie’ ahead of key inflation data.
At the time of writing, GBP/AUD was trading around AU$1.9081, up approximately 0.3% on the day.
Latest — Exchange Rates:
Pound to Australian Dollar (GBP/AUD): 1.912214 (+0.38%)
Pound to Dollar (GBP/USD): 1.329842 (+0.09%)
DAILY RECAP:
The Australian Dollar (AUD) softened on Tuesday after investors pared expectations for further Reserve Bank of Australia interest rate hikes following mixed remarks from Governor Michele Bullock.
Speaking in Sydney at the annual Anika Foundation lunch, Bullock reiterated concerns over persistently high inflation and suggested that further policy tightening may still be required.
However, she also emphasised the high level of uncertainty surrounding the economic outlook and noted that previous interest rate increases would take more time to feed through into the economy.
The comments prompted investors to trim expectations for an August rate hike and, combined with a more cautious market mood, left the ‘Aussie’ under pressure.
Meanwhile, the Pound (GBP) traded in a relatively narrow range against most major currencies in the absence of fresh UK economic data.
With few domestic catalysts, investors were reluctant to take significant positions ahead of Thursday's Bank of England (BoE) interest rate decision.
The BoE is widely expected to leave interest rates unchanged at 3.75%, leaving markets focused on policymakers' forward guidance. If the Bank remains non-committal about the prospect of another rate hike later this year, Sterling could struggle to find support.
Near-Term GBP/AUD Forecast: Rising Inflation to Lift the 'Aussie'? Looking ahead, Australia's quarterly consumer price index will be the key driver of the Pound to Australian Dollar exchange rate.
Inflation is expected to remain at 4.1% in the second quarter, although recent developments in the Middle East have increased the risk of a stronger-than-expected reading.
A higher inflation print could revive expectations for further Reserve Bank of Australia interest rate hikes and provide fresh support for the Australian Dollar.
Meanwhile, Sterling is likely to remain rangebound through the middle of the week as investors await Thursday's Bank of England policy announcement.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
The Pound to Australian Dollar (GBP/AUD) exchange rate fell to its weakest level since late June last week as stronger Australian economic data reinforced expectations for further Reserve Bank of Australia interest rate hikes.
At the time of writing, GBP/AUD was trading around AU$1.9073, down approximately 1% over the week.
Latest — Exchange Rates:
Pound to Australian Dollar (GBP/AUD): 1.90626 (-0.10%)
Pound to Dollar (GBP/USD): 1.335557 (+0.23%)
DAILY RECAP:
The Australian Dollar (AUD) proved remarkably resilient last week, with the risk-sensitive currency defying the broader deterioration in market sentiment linked to renewed conflict in the Middle East.
While risk appetite weakened during the second half of the week as geopolitical tensions intensified and oil prices climbed, the ‘Aussie’ avoided a sharper sell-off thanks to stronger domestic economic data.
AUD investors were particularly encouraged by Australia's latest employment report, which showed the economy created more than 76,000 jobs in June.
Together with stronger-than-expected July PMI readings, the figures reinforced expectations for further Reserve Bank of Australia (RBA) interest rate hikes and helped the Australian Dollar end the week firmly higher.
Meanwhile, the Pound (GBP) struggled to attract sustained support as rising UK government borrowing costs unsettled investors.
Although higher global energy prices contributed to the rise in gilt yields, markets also focused on Prime Minister Andy Burnham's first wave of cost-of-living measures.
The removal of VAT on domestic electricity bills and tax relief for hospitality businesses raised fresh questions over how the government intends to finance the measures while remaining within Labour's fiscal rules.
A busy week of UK economic data provided only mixed support for Sterling. Strong employment and retail sales figures were offset by softer inflation, which kept expectations for further Bank of England (BoE) interest rate hikes in check.
Near-Term GBP/AUD Forecast: Cautious BoE to Sap Sterling Sentiment? Looking ahead, the Bank of England's latest interest rate decision is expected to be the main driver of the Pound to Australian Dollar exchange rate this week.
Markets widely expect policymakers to leave interest rates unchanged, placing the emphasis on the Bank's forward guidance.
Sterling could come under renewed pressure if the BoE continues to emphasise downside risks to growth and maintains a cautious policy outlook.
However, if policymakers acknowledge that rising energy prices have increased inflation risks and leave the door open to further tightening, the Pound may stage a recovery.
For the Australian Dollar, attention will focus on Australia's quarterly inflation report. A stronger-than-expected rise in consumer prices would reinforce expectations for further RBA interest rate hikes and could provide additional support for the ‘Aussie’.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
The Pound to Australian Dollar (GBP/AUD) exchange rate fell to a near one-month low on Thursday after stronger-than-expected Australian employment figures boosted the ‘Aussie’.
At the time of writing, GBP/AUD was trading around AU$1.9091, having recovered from an intraday low of approximately AU$1.9066.
Latest — Exchange Rates:
Pound to Australian Dollar (GBP/AUD): 1.911595 (-0.12%)
Pound to Dollar (GBP/USD): 1.332 (-0.41%)
DAILY RECAP:
The Australian Dollar (AUD) strengthened during Thursday’s Asian trading session following the release of Australia’s latest employment report.
The data showed employment increased by 76,300 in June, comfortably beating forecasts for a rise of 15,000.
The stronger-than-expected labour market reinforced expectations that the Reserve Bank of Australia (RBA) could continue raising interest rates later this year.
However, the risk-sensitive ‘Aussie’ struggled to hold onto all of its gains as a cautious market mood weighed on demand during European trade.
Meanwhile, the Pound (GBP) remained subdued as markets continued to assess Andy Burnham’s first week as Prime Minister.
Sterling had strengthened in the run-up to Burnham entering Downing Street as investors unwound the political risk premium previously built into the currency.
However, the Pound has since trended lower amid ongoing questions over how the government's spending commitments and tax cut pledges will be financed.
This uncertainty continued to limit Sterling on Thursday.
Near-Term GBP/AUD Forecast: PMI Surveys in Focus Looking ahead, Friday's Asian session brings Australia's preliminary PMI surveys.
If private sector activity slowed to near-stagnation in July, as expected, the Australian Dollar could face renewed pressure.
European trading then begins with the UK's June retail sales figures. A forecast 0.3% contraction in sales could weigh on Sterling.
Later in the morning, attention turns to the UK's preliminary PMI surveys, with investors particularly focused on the services reading. Any improvement in business activity could provide the Pound with modest support.
Meanwhile, broader market risk appetite and UK political developments are also likely to influence GBP/AUD trading, potentially leading to increased volatility.
Morgan Stanley expects the Pound to weaken against the Australian Dollar over the coming months, forecasting GBP/AUD will fall to 1.82, as improving sentiment towards Australia contrasts with growing political and fiscal risks in the UK.
The Pound to Australian Dollar exchange rate (GBP/AUD) traded around 1.93 on Monday after rebounding from June lows below 1.90, leaving the pair close to its highest levels of the year despite the bank believing the rally has gone too far.
Latest — Exchange Rates:
Pound to Australian Dollar (GBP/AUD): 1.917965 (-0.49%)
Pound to Dollar (GBP/USD): 1.345149 (-0.02%)
Australian Dollar to Dollar (AUD/USD): 0.701342 (+0.47%)
Morgan Stanley remains one of the more bearish investment banks on Sterling, arguing that much of the recent optimism surrounding the UK's political outlook has already been priced into the currency.
"We are bearish GBP."
The bank says Sterling rallied after reports that the incoming government could appoint a more fiscally conservative Chancellor than initially feared, but believes investors have already discounted much of that positive news.
"We think the market has priced in the 'good news' from the potential for a more fiscally conservative Chancellor than initial market expectations."
Morgan Stanley adds that there is still little clarity on the new government's economic agenda, while attention is likely to shift towards difficult fiscal decisions ahead of the autumn Budget.
"With so much good news already in the price, we think the hurdle for further upside surprises has moved higher."
In contrast, the bank retains a constructive view on the Australian Dollar. It points to resilient business confidence, attractive carry returns and expectations that Australian front-end yields will remain relatively elevated.
"We remain bullish on AUD."
Morgan Stanley believes steady labour market conditions and relatively hawkish Reserve Bank of Australia expectations should continue to attract investors seeking higher-yielding currencies.
Near-Term GBP/AUD Forecast: Morgan Stanley Expects Sterling to Give Back Recent Gains Reflecting these contrasting outlooks, Morgan Stanley continues to recommend a short GBP/AUD trade.
The bank has a target of 1.82, representing a decline of around 6% from current levels.
"GBP/AUD faces downward pressure from elevated risk appetite and a potential increase in GBP negative risk premium."
Morgan Stanley believes the combination of stronger Australian fundamentals and rising UK fiscal uncertainty should allow the Australian Dollar to outperform Sterling over the coming months, particularly if global risk sentiment remains supportive.
The Pound to Australian Dollar (GBP/AUD) exchange rate traded in a wide range last week, briefly falling to a two-week low before recovering to test fresh multi-month highs amid UK Chancellor speculation.
At the time of writing, GBP/AUD was trading at AU$1.9262, virtually unchanged on the week after retreating from a high of AU$1.9350.
Latest — Exchange Rates:
Pound to Australian Dollar (GBP/AUD): 1.927315 (+0.11%)
Pound to Dollar (GBP/USD): 1.345377 (-0.17%)
Australian Dollar to Dollar (AUD/USD): 0.698058 (-0.28%)
DAILY RECAP:
The Pound (GBP) got off to a subdued start last week, as a quiet UK economic calendar left investors with few fresh domestic catalysts.
Sterling sentiment was also suppressed by cautious remarks from Bank of England Governor Andrew Bailey, who reiterated the bank's policy remains data dependent.
The Pound’s fortunes then improved markedly in mid-week trade amid reports that incoming Prime Minister Andy Burnham might be looking to appoint Shabana Mahmood as his Chancellor over Ed Miliband, with the former being viewed by markets as more fiscally conservative.
However, the jump in Sterling proved short-lived, with the currency succumbing to subsequent profit-taking, which overshadowed a rebound in UK GDP in May.
Meanwhile, trade in the Australian Dollar (AUD) was mixed last week, with the resumption of hostilities in the Gulf driving volatility in the currency throughout the session.
Demand for the risk-sensitive ‘Aussie’ was also knocked later in the session as a global tech stock selloff spooked markets.
On a more positive front was the release of Australia's latest consumer and business confidence surveys, which both reported an improvement in morale.
Near-Term GBP/AUD Forecast: Burnham's First Moves as PM in the Spotlight Looking to the week ahead, Andy Burnham's first days in office are likely to act as a key catalyst for the Pound to Australian Dollar exchange rate.
The spotlight will undoubtedly be on who Burnham ultimately appoints as his Chancellor of the Exchequer, with markets likely to favour a more fiscally conservative pick.
At the same time, there is also a glut of high-impact UK economic releases set to influence Sterling this week, with GBP investors particularly focused on how the latest employment and inflation figures could influence Bank of England rate expectations.
Meanwhile, the focus for AUD investors will be on Australia's latest employment data, with the ‘Aussie’ poised to weaken if another weak jobs report tempers Reserve Bank of Australia rate hike bets.
The Pound to Australian Dollar (GBP/AUD) exchange rate briefly climbed to a one-week high on Thursday before easing back as investors locked in profits following Sterling's recent rally.
At the time of writing, GBP/AUD was trading at AU$1.9294, having retreated from an earlier high of AU$1.9353.
Latest — Exchange Rates:
Pound to Australian Dollar (GBP/AUD): 1.926352 (-0.27%)
Pound to Dollar (GBP/USD): 1.347811 (-0.45%)
Australian Dollar to Dollar (AUD/USD): 0.69967 (-0.19%)
DAILY RECAP:
The Australian Dollar (AUD) softened during Thursday’s Asian trading session as markets reacted to new data.
Australian consumer inflation expectations unexpectedly eased from 5.5% in June to 4.7% in July, the lowest reading since January.
The latest figures slightly dampened Reserve Bank of Australia (RBA) interest rate hike expectations, although the impact was limited.
This allowed AUD to recoup some losses as European trade began.
Meanwhile, the Pound (GBP) trended slightly lower on Thursday, with GBP surrendering some of Wednesday’s impressive gains.
Sterling had rallied in the middle of the week following reports that Shabana Mahmood is now the frontrunner for Chancellor in incoming Prime Minister Andy Burnham’s cabinet, rather than Ed Miliband.
Miliband had been the favourite to enter Number 11, but there were concerns among investors that the soft-left MP would pursue less orthodox fiscal policy. Mahmood is seen as more market-friendly, with City figures welcoming reports that she could be Burnham’s choice.
However, the Pound couldn’t sustain its gains into Thursday, even with UK GDP printing as forecast to show a 0.1% recovery in May.
Following Wednesday’s gains, Sterling seemed to suffer some profit-taking.
Near-Term GBP/AUD Forecast: Wider Trends to Drive the Pairing Looking ahead, economic data is thin on the ground for both the Pound and the Australian Dollar on Friday, likely leaving the pairing to trade on wider market trends.
Sterling may draw support as Andy Burnham is formally declared Labour leader, paving the way for him to enter Number 10 on Monday, if investors continue to feel more certain about the future of UK politics.
Meanwhile, market risk dynamics may drive the risk-sensitive ‘Aussie’. Events in the Middle East could be key, although the recent escalation in tensions has had a muted impact on the market mood so far.
The British pound was the standout performer among the major currencies on Wednesday, buoyed by a weaker US dollar and growing optimism over the UK's fiscal outlook. Sterling rallied across the board, lifting GBP/USD to a nine-week high while GBP/AUD rebounded from support to challenge key long-term resistance.
View related analysis:
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Source: LSEG
Sterling Surges on Treasury Pick Speculation as GBP/USD and GBP/AUD Rally The British pound surged across the board on Wednesday following reports that incoming UK Prime Minister Andy Burnham is considering Shabana Mahmood for Finance Minister. While Mahmood has little direct economic policy experience, markets view her as a fiscally cautious choice. Her appointment would also reduce the likelihood of Ed Miliband becoming Chancellor, a candidate investors perceive as more likely to increase public spending, boost borrowing and pursue ambitious net-zero spending plans.
British Pound Breaks Higher Against the US Dollar GBP/USD rallied 1.2% to a nine-week high during its strongest session in four months, closing decisively above 1.3500. Sterling also drew support from a weaker US dollar, which fell for a second consecutive session and is now within striking distance of the psychologically important 100 level on the US Dollar Index.
The 1-hour chart shows how explosive the rally was, producing seven consecutive bullish candles during its 146-pip advance without a meaningful pullback. Prices are now consolidating in a tight range above the monthly R1 pivot (1.3521). However, after such a sharp move, the pair may be overstretched, with the RSI (14) in overbought territory, so bulls may want to be on guard for a minor pullback. The daily pivot point sits just below 1.3500, while the 15 June high aligns with the weekly S1 pivot (1.3461), providing a potential support zone.
With the US dollar retracing lower and GBP/USD maintaining its bullish momentum, buyers may be eyeing a move towards the monthly R2 pivot (1.3636), just below the May high.
Source: ICE, TradingView
GBP/AUD Bulls Eye Break Above Key Long-Term Resistance Earlier this week, I was working on the assumption that GBP/AUD could fall. Its three-week rally had been accompanied by waning momentum, while the previous two weekly candles formed long upper wicks, culminating in a shooting star reversal below the 200-day EMA. That view appeared to be playing out on Tuesday as the pair pulled back to its 20-day EMA, although Wednesday's bullish engulfing candle suggests the pullback may already be over.
March High Remains the Key Bullish Hurdle for GBP Bulls With a well-established uptrend and a potential swing low forming around the 12 June high and 20-day EMA, bulls may be preparing for another attempt to break above the 200-day and 200-week EMAs. This paints a bullish near-term picture heading into today's session, although there is also a reasonable chance of a shakeout around 1.9400 given the significance of the long-term moving averages and the March high.
Even so, unless a clear bearish catalyst emerges for the British pound, I suspect GBP bulls will look to buy any dips in anticipation of a bullish breakout above the March high. If they succeed, the 1.9595 high comes into focus for GBP/AUD.
The Pound to Australian Dollar (GBP/AUD) exchange rate edged lower on Tuesday as stronger Australian confidence data and robust Chinese trade figures supported the ‘Aussie’.
At the time of writing, GBP/AUD was trading at AU$1.9254, down around 0.2% on the day.
Latest — Exchange Rates:
Pound to Australian Dollar (GBP/AUD): 1.9273 (-0.11%)
Pound to Dollar (GBP/USD): 1.338663 (+0.28%)
Australian Dollar to Dollar (AUD/USD): 0.69458 (+0.39%)
DAILY RECAP:
The Australian Dollar (AUD) strengthened on Tuesday, supported by an improvement in domestic sentiment.
Australia’s latest consumer and business confidence indexes outperformed expectations in July and June, respectively.
This improvement was attributed to easing concerns over energy costs, interest rates and the labour market.
At the same time, demand for the ‘Aussie’ was also bolstered by some spectacular trade figures from its largest trading partner, China.
China recorded its second-largest trade surplus on record in June, with markets particularly impressed by the 36% surge in imports to an all-time high of $286.76bn.
The spike was welcomed by AUD investors as Australian exports are likely to have seen a bump amid the jump in demand.
Meanwhile, while placed on the defensive against the Australian Dollar, the Pound (GBP) traded positively against most of its other peers on Tuesday amid renewed expectations for a Bank of England (BoE) interest rate hike.
Bets for a rate hike before the end of 2026 have risen amid the fresh rise in energy prices as the resumption of hostilities in the Gulf has closed the Strait of Hormuz again.
However, the Pound’s upside potential was simultaneously capped by remarks from BoE Governor Andrew Bailey.
Speaking to the Treasury Select Committee, Bailey warned of potential instability stemming from the conflict as well as flagging the UK’s slow growth as a major risk to the economy.
Near-Term GBP/AUD Forecast: Slowing Chinese GDP to Drag on the ‘Aussie’? Looking ahead to the middle of the week, the publication of China’s latest GDP figures could influence the Pound to Australian Dollar exchange rate.
The ‘Aussie’ may face headwinds as consensus estimates predict Chinese economic growth will have cooled in the second quarter.
Meanwhile, notable UK economic releases are in short supply on Wednesday, which may leave movement in Sterling to be dictated by wider market trends.
GBPAUD currency pair recently reversed from the resistance zone between the key resistance level 1.9365 (former monthly high from March), upper daily Bollinger Band and the 50% Fibonacci correction of the downward impulse from December.
The downward reversal from this resistance area stopped the earlier minor impulse wave 3 of the medium-term impulse wave (C) from June.
Given the strength of the resistance level 1.9365 and the overbought daily Stochastic, GBPAUD currency pair can be expected to fall further to the next support level 1.9115.
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The Pound to Australian Dollar (GBP/AUD) exchange rate opens the new week around 1.9271 after holding close to five-month highs, with Sterling remaining well supported while the Australian Dollar faces another busy week of domestic data and renewed scrutiny over China's economic outlook.
Latest — Exchange Rates:
Pound to Australian Dollar (GBP/AUD): 1.927065 (-0.05%)
Pound to Dollar (GBP/USD): 1.339 (-0.12%)
Australian Dollar to Dollar (AUD/USD): 0.694839 (-0.07%)
WEEKLY RECAP:
GBP/AUD spent much of last week consolidating just below the 1.93 level after a strong rally through June.
The Pound continued to outperform despite evidence that the UK economy is slowing.
Markets remain reluctant to price aggressive Bank of England easing while inflation stays above target, helping Sterling retain a yield advantage over several major currencies.
In its latest monthly outlook, MUFG said the Pound was among the strongest-performing G10 currencies through June, supported by resilient investor confidence and the fading inflation shock as oil prices retreated.
The Australian Dollar struggled to generate sustained demand.
Although global risk sentiment has improved following the easing of Middle East tensions, investors remain cautious over China's economic outlook, a key driver for Australian exports.
Reuters has reported that attention is now turning to China's second-quarter GDP and June activity data, with markets expecting slower growth after softer domestic demand and weaker investment. Those figures are likely to have an important bearing on the Australian Dollar this week.
In a recent client note, ING highlighted that Sterling is increasingly being driven by domestic developments, while commodity-linked currencies remain more exposed to changes in global growth expectations.
Near-Term GBP/AUD Forecast: China GDP and UK GDP in Focus For Pound Sterling, investors will watch Thursday's monthly UK GDP estimate for May, together with industrial production and trade balance figures. Stronger-than-expected data would reinforce the view that the UK economy has remained resilient despite softer business surveys.
For the Australian Dollar, the spotlight falls on China's second-quarter GDP, June retail sales and industrial production, all due on Wednesday. Stronger Chinese data would likely support the Australian Dollar by improving confidence in Australia's export outlook, while weaker figures could renew pressure on the currency.
Markets will also continue to monitor developments in commodity markets following the recent decline in oil prices and any fresh guidance from Reserve Bank of Australia officials after last week's policy decision.
If UK GDP surprises to the upside while Chinese growth data disappoints, GBP/AUD could retest resistance around 1.94.
However, stronger Chinese activity data and firmer commodity prices could allow the Australian Dollar to recover, pulling the pair back towards 1.90.
Oil is back in the driver’s seat, and both the pound and the aussie are feeling its grip. The Bank of England held rates at 3.75% in June, but with UK inflation at 2.8% and crude oil climbing on renewed Middle East tensions, markets now lean towards a hike before year-end. Down under, the Reserve Bank of Australia held its cash rate at 4.35% after three straight increases, with core inflation stuck at 3.6%, keeping the door open for further tightening. Two hawkish central banks, one shared inflationary culprit—yet it’s the existing 60-basis-point rate gap in Australia’s favour that is giving GBP/AUD its current shape, with the pair holding firm near the 1.93 handle as traders watch which bank blinks first.
Technical Outlook
GBP/AUD pits two currencies backed by hawkish central banks against each other. After a sharp downtrend, the pair found a floor in May 2026 and has since reversed into a medium-term uptrend as sterling claws back ground against the aussie. Price is now testing a key resistance zone that has previously capped upside attempts, making the coming sessions pivotal.
Bullish Scenario
Several sessions of strong bullish momentum have kept sterling supported. The pair is testing a crucial resistance zone at 1.9350–1.9400, which has rejected price before.
A confirmed break above could open the path towards the next resistance at 1.9520–1.9550.
Such a breakout would likely require fundamental support, such as further escalation in the Middle East or an even more hawkish BoE.
Bearish Scenario
Price could reject the resistance zone once again, reinforcing it as a key barrier.
A bearish RSI divergence on the 4H chart adds weight to this scenario, with price posting higher highs while the RSI prints lower highs—a sign of fading momentum.
The ascending trendline is now the nearest relevant support; a break below could expose the intermediate zone at 1.9080–1.9120, where price may pause and consolidate.
Should tensions ease or fresh UK political developments emerge, sterling could lose ground, breaking below this zone to test the next support at 1.8780–1.8820.
Ultimately, GBP/AUD’s next move will hinge on geopolitical and macroeconomic developments, alongside these key technical levels. Which of the two currencies will show greater strength in the sessions ahead?
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