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GBP dips will continue being bought.
The Pound-to-Australian Dollar exchange rate (GBP/AUD) retains a broad uptrend and a break to fresh multi-year highs is in prospect for the coming days and weeks.
However, there is a band of resistance that appears to be blocking the way for now, and we are on alert for a deeper pullback that would enforce the current short-term trend of consolidation.
The rally took GBP/AUD to 2.0651 last Thursday, which was nothing more than another attempt to break above resistance in the ~2.0562-2.0651 zone. A look at the chart shows seven stabs above here in the past month, and all have failed:
Failures have nevertheless all been bought into, which speaks of underlying demand for GBP against AUD.
The exchange rate trades above the nine-day exponential moving average (EMA) - currently at 2.0505 - which means we are holding out for another attempt at 2.0651 this week.
For now, dips to the nine-day EMA form the extent of weakness.
The Australian Dollar is clearly under pressure in a 2025 environment of trade tensions, with all eyes now trained on the April 02 reciprocal tariff announcement from the White House.
This will be the biggest tariff announcement of the current Trump presidency and poses significant challenges to AUD, which is a currency that maintains a strong positive correlation with U.S. equity markets.
This is because AUD is a sentiment-sensitive currency, and the proxy for this sentiment is U.S. equity markets. In 2025, U.S. markets struggled as Trump's erratic policy-making weighed on sentiment, which in turn weighed on AUD.
Only when bullish sentiment reestablishes and U.S. markets start rising will we look for a broader AUD recovery and a turn lower in GBP/AUD.
Turning to the domestic calendars, there is some interest in the form of Australia's monthly CPI indicator due later in the week, while the UK has a busy calendar that should inject some volatility into GBP/AUD.
?? Australia – Economic Events (Week of March 25–29, 2025)
Tuesday, March 25
? RBA Assistant Governor (Financial System) – Speech. Time: 10:10am AEDT (fireside chat)
? AUD Impact:
Markets will watch for any tone shift from the RBA on financial stability, inflation, or rate outlook. Hawkish remarks may support AUD, while dovish tones could weigh on the currency.
? 2025–26 Federal Budget (Pre-Election Edition)
Key Themes: Tactical pre-election measures but limited fiscal space.
? AUD Impact: If budget measures are seen as fiscally disciplined, it may support AUD by avoiding additional inflation pressures. However, excessive spending or policy missteps could increase RBA tightening risks or raise deficit concerns, potentially weighing on AUD.
Wednesday, March 26
? Monthly CPI Indicator (February)
Previous (Jan): 2.5% YoY
Market Forecast: 2.5% YoY
Westpac Forecast: 2.5% YoY
Expected MoM: Flat (0.0%)
? AUD Impact: On-consensus print likely to confirm gradual disinflation, reinforcing expectations that the RBA will remain cautious. A higher-than-expected CPI, particularly in services, may delay rate cuts, supporting AUD. A softer print could signal cooling inflationary pressure, weighing on AUD.
?? British Pound Calendar
Picture by Kirsty O’Connor / HM Treasury.
Monday, March 24
? S&P Global Flash PMIs (Mar)
Sterling firms on Monday after S&P Global's services PMI rose to 53.2 in March, easily beating estimates for 51.2 and marking a notable uptick from February's 51.
Manufacturing is, nevertheless, in trouble, with the Manufacturing PMI slumping to 44.6 from 46.9.
However, because manufacturing now represents a small portion of the broader economy, the composite PMI, which gives a sector-adjust reading, read at 52. This is a marked increase on February's 50.5 and is the biggest rise in six months.
"An upturn in business activity in March brings some good news for the government ahead of the Chancellor’s Spring Statement," said Chris Williamson, Chief Business Economist at S&P Global Market Intelligence. "However, one good PMI doesn’t signal a recovery. The economy is eking out modest growth, with employment still falling and confidence close to two-year lows."
? BoE Governor Bailey Speech (18:00 GMT)
? GBP Impact:
A hawkish tone (concern over inflation, rate cut caution) could lift GBP. A dovish tone may signal future easing, pressuring GBP.
Wednesday, March 26
? CPI (Feb)
Expected:
Monthly: +0.5%
Annual Headline CPI: 2.9%
Annual Core CPI: 3.6%
Previous:
Monthly: -0.1%
Annual Headline CPI: 3.0%
Annual Core CPI: 3.7%
? GBP Impact:
A higher-than-expected print could delay BoE rate cuts, supporting GBP.
A cooler-than-expected CPI would reinforce disinflation and increase easing expectations, likely weighing on GBP.
? Chancellor Rachel Reeves Budget Update (12:30 GMT)
? GBP Impact:
Fiscal stimulus or prudent budgeting could support GBP if seen as growth-positive or fiscally responsible. Loose spending without funding clarity might raise debt concerns, which are mildly bearish for GBP.
A repeat of the Liz Truss 'mini budget' currency collapse is highly unlikely.
Friday, March 28
? Final Q4 GDP (QoQ & YoY)
Expected (QoQ): +0.1%
Expected (YoY): +1.4%
Previous: +0.1% QoQ, +1.4% YoY
? GBP Impact:
As a final print, market impact will be limited unless revised. A surprise upward revision could boost GBP modestly.
? Retail Sales (Feb)
Including Fuel:
Expected: -0.4% MoM (0.6% YoY)
Previous: +1.7% MoM (1.0% YoY)
Excluding Fuel:
Expected: -0.5% MoM (0.4% YoY)
Previous: +2.1% MoM (1.2% YoY)
? GBP Impact:
A sharp drop in sales could signal weakening demand, negative for GBP. If data surprises positively, it may support GBP by reducing growth concerns.