Pound To Australian Dollar Price Forecast: GBP Gains As China PMI Miss Hits Aussie

The Pound to Australian Dollar (GBP/AUD) exchange rate edged higher on Monday as stronger UK manufacturing data and weaker Chinese factory figures weighed in favour of Sterling.

At the time of writing, GBP/AUD was trading around AU$1.8754, up roughly 0.2% on the day.

DAILY RECAP:

The Australian Dollar (AUD) came under pressure at the start of the week as investors reacted to a combination of softer Chinese economic data and renewed geopolitical uncertainty in the Middle East.

China’s latest manufacturing PMI pointed to a further slowdown in factory activity during May, raising concerns over demand prospects in Australia’s largest export market.

The weaker Chinese data added to existing pressure on the risk-sensitive ‘Aussie’, particularly as markets remained cautious over developments in the Middle East.

Investor sentiment deteriorated after fresh exchanges between the US and Iran over the weekend increased uncertainty surrounding ongoing ceasefire and peace negotiations.

The resulting risk-off mood reduced demand for growth-linked currencies, leaving the Australian Dollar on the defensive through much of Monday’s session.

Meanwhile, the Pound (GBP) found support from an upward revision to the UK’s final manufacturing PMI.

The survey confirmed that UK factory activity expanded at its fastest pace in four years during May, suggesting the manufacturing sector continues to benefit from stronger order books and inventory rebuilding.

The report also highlighted a further acceleration in factory input costs, with businesses reporting rising energy and transportation expenses linked to ongoing disruption in global energy markets.

This helped reinforce expectations that inflationary pressures may remain elevated and supported speculation that the Bank of England could still be forced to tighten monetary policy further later this year.

As a result, Sterling outperformed the Australian Dollar despite the generally cautious market backdrop.

GBP/AUD Forecast: Australian Profits Data and BoE Speakers in Focus

Looking ahead, Australian company profits data could influence the Australian Dollar during Tuesday’s Asian session.

Economists expect profits growth to have slowed sharply during the first quarter of 2026. A weaker-than-expected reading could raise concerns over domestic economic momentum and place additional pressure on AUD exchange rates.

For Sterling, attention will turn to comments from Bank of England policymaker Megan Greene.

As one of the Monetary Policy Committee’s more hawkish members, any indication that inflation risks remain elevated or that further tightening may be required could offer additional support to the Pound.

Beyond economic releases, developments in the Middle East are likely to remain a major driver of market sentiment.

Further progress towards a peace agreement could improve risk appetite and support the Australian Dollar, while renewed escalation may favour Sterling against the risk-sensitive ‘Aussie’.