Pound-to-Australian Dollar Week Ahead Forecast: Look for Lower Levels

Image © Adobe Stock

The Pound can fall against the Aussie Dollar in the short term.

The Pound-to-Australian Dollar exchange rate (GBP/AUD) is in a long-term uptrend, but there is a high chance for last week's retracement of recent gains to extend into the coming days.

GBP/AUD rose to its highest level since 2020 last week, having achieved 2.0630, but this was rejected on four occasions. From here, the unwind began:

Above: GBP/AUD at daily intervals.

GBP/AUD investment bank consensus forecast for 2025. See the median, mean, highest and lowest targets, giving a highly accurate forecasting resource. Request your copy now.

The rejection of this level signals some exhaustion in the rally, which was prewarned by the Relative Strength Index (RSI) lurching into wildly overbought territory, reaching 76 at one stage.

These overbought conditions were on our radar when we wrote our previous Week Ahead Forecast, and we were correct in predicting last week's correction based on the observation of the RSI.

The stance for the coming five days is to let this pullback and consolidation further room to breathe, and we look for lower levels as a result, with the March 06 low at 2.0285 in the crosshairs.

Taking a step back and rolling back the daily chart shows that GBP/AUD is in a long-term uptrend, with a rough upward trending line annotated:

Above: Zooming out, the uptrend is prone to prolonged setbacks.

As the chart suggests, pullbacks can be quite deep and lengthy, and there is easily scope for a multi-week setback before the trend higher ultimately reboots. In fact, for the trend to remain healthy, a correction is needed.

AUD weakness against EUR and GBP comes as Donald Trump pursues an aggressive tariff strategy that has weighed on U.S. stock markets.

GBP/AUD displays a positive correlation with the U.S. S&P 500 index by virtue of its reliance on positive investor sentiment, meaning losses in U.S. markets are coinciding with GBP/AUD strength. If the U.S. equity rout continues, we would anticipate GBP/AUD weakness to be shallow and the rally to resume soon.

Markets are likely to be nervous heading into the April 02 tariff announcement where Trump is set to announce his biggest tariff package yet.

But, any meaningful rebound in stocks can contribute to GBP/AUD weakness. If tariff correction is now incorporated in the price of stocks and currencies, GBP/AUD upside becomes limited.

Regarding tariffs on Australia, there was a definite sense of disappointment last week when Trump confirmed Australia would not be exempt from metals tariffs. This stumped Prime Minister Anthony Albanese, who proudly announced a carve-out for Australia only a month prior.

The uncertainty of Trump's policy stance is the real message here, and for AUD, it's not helpful.

In the week ahead, we will of course be watching Trump's social media accounts. But, the calendar data highlight will be the U.S. Federal Reserve decision, where rates are likely to be left on hold.

The guidance on the outlook for rates will offer the surprise factor, and any hint that the Fed would respond to signs of a slowing economy by cutting interest rates could bolster U.S. equity markets, and, by extension, the Australian Dollar.

AUD Calendar

Tuesday, March 18

📌 RBA Assistant Governor (Economic) Hunter Speech
Event: Speaking at the AFR Banking Summit (10:20 AM AEDT)

🔹 Market Impact:
A hawkish tone (concerns about inflation, cautious on rate cuts) could support AUD.
A dovish tone (focus on economic risks, potential rate cuts) could weigh on AUD.

Wednesday, March 19

📌 Westpac-MI Leading Index (Feb, Annualized Growth Rate)
Previous: +0.58%

🔹 Market Impact:
Higher growth in the index suggests improving economic conditions, supporting AUD.
A weaker print may signal slower economic momentum, increasing rate cut bets, weakening AUD.

Thursday, March 20

📌 Employment Change (Feb, MoM)
Expected: +30K
Previous: +44K

🔹 Market Impact:

A stronger-than-expected increase in employment supports AUD by reinforcing economic resilience.
A weak figure may increase RBA rate cut speculation, putting downward pressure on AUD.

📌 Unemployment Rate (Feb)
Expected: 4.0%
Previous: 4.1%

🔹 Market Impact:
A lower unemployment rate would indicate labor market strength, supporting AUD.
A higher-than-expected print may signal softening employment conditions, weighing on AUD.

GBP Calendar

It's a busy two weeks ahead for the UK economy, but interest only picks up from Thursday onwards when we get the Bank of England decision and earnings data release.

Thursday, March 20

📌 Average Weekly Earnings (Jan, 3m/12m YoY)
Inc. Bonuses: Expected: 5.8% | Previous: 6.0%
Ex. Bonuses: Expected: 5.9% | Previous: 5.9%

🔹 Market Impact:
A stronger-than-expected reading could indicate wage-driven inflation, reducing rate cut expectations and supporting GBP.
A weaker reading may signal wage growth cooling, increasing BoE rate cut speculation, weakening GBP.

📌 ILO Unemployment Rate (Jan)
Expected: 4.5%
Previous: 4.4%

🔹 Market Impact:
If unemployment rises above expectations, it could indicate labor market weakness, increasing pressure for BoE rate cuts, potentially weighing on GBP.
A stable or lower unemployment rate may support GBP by reinforcing economic resilience.

📌 Employment Change (3m/3m, Jan)
Expected: 95K
Previous: 107K

🔹 Market Impact:
If employment figures exceed expectations, it suggests labour market strength, supporting GBP.
A weaker-than-expected print may indicate hiring slowdown, weakening GBP.

📌 Bank of England (BoE) Interest Rate Decision
Expected: 4.50% (unchanged)
Previous: 4.50%

🔹 Market Impact:
If the BoE signals a cautious stance on rate cuts, it could support GBP.
If the BoE hints at earlier rate cuts, it may weaken GBP.

Friday, March 21

📌 GfK Consumer Confidence (Mar)
Expected: -21
Previous: -20

🔹 Market Impact:
A higher reading (less negative) suggests improving consumer sentiment, potentially supporting GBP.
A lower reading could indicate consumer pessimism, weighing on GBP.

📌 Public Sector Net Borrowing (Feb)

Expected: £7.0bn
Previous: -£15.4bn

🔹 Market Impact:
A higher-than-expected deficit may raise fiscal concerns, weakening GBP.
A better-than-expected print could support GBP by easing fiscal concerns.