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.
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.
Our currency coverage draws on live market data, official economic releases and published bank research.
