GBP Slips As Consumer Confidence Lifts AUD

The Pound to Australian Dollar exchange rate edged lower midweek as upbeat Australian consumer confidence and improving risk appetite helped support the ‘Aussie’.

DAILY RECAP:

The Australian Dollar (AUD) strengthened during Tuesday’s Asian trading session as a slightly more optimistic global market mood and stronger domestic sentiment data buoyed the currency.

Risk appetite improved after remarks from US President Donald Trump suggested the US could achieve its military objectives in Iran sooner than expected, raising hopes that the conflict in the Middle East may not escalate further.

AUD was also supported by an unexpected improvement in Australian consumer sentiment.

The Westpac–Melbourne Institute consumer confidence index rose by around 1.2% in March, indicating households had become marginally more optimistic about their financial outlook despite persistent concerns around inflation and the impact of tighter monetary policy from the Reserve Bank of Australia (RBA).

However, the Australian Dollar’s gains were somewhat tempered by weaker business sentiment data. Australia’s latest business confidence survey slipped into negative territory in February for the first time in nearly a year, highlighting lingering concerns about economic momentum.

Meanwhile, the Pound (GBP) traded in a narrow range amid renewed worries about the UK’s economic outlook.

Sterling sentiment was dampened after the British Chambers of Commerce (BCC) downgraded its UK growth forecast for 2026 from 1.2% to 1%. The organisation warned that the UK remains stuck in a “low-growth pattern” and cautioned that the Middle East conflict could push inflation higher again by driving up energy costs.

The BCC also warned that rising business costs could lead to higher unemployment, projecting the jobless rate could climb to around 5.5% in the coming years.

Near-Term GBP/AUD Forecast: Bailey Speech in Focus

Looking ahead, easing geopolitical tensions could continue to support the risk-sensitive Australian Dollar if markets become more optimistic about the outlook for the Middle East conflict.

Improving risk sentiment typically benefits currencies such as the ‘Aussie’, potentially keeping GBP/AUD on the defensive in the near term.

For Sterling, investors will focus on a scheduled speech from Bank of England Governor Andrew Bailey on Thursday.

Any signals that the BoE may pause its rate-cutting cycle for longer than expected could provide some support to the Pound. However, if Bailey strikes a cautious tone about the UK economic outlook, Sterling could struggle to regain momentum.