GBP/AUD Forecast: Pound to Australian Dollar Exchange Rate Static as Commons Brexit Debate Begins

Debate On Continued Customs Union Membership Leaves GBP/AUD Exchange Rate Steady

The Pound (GBP) has continued to trade around opening levels against the Australian Dollar (AUD) today, as a key House of Commons debate starts.

MPs are discussing the contentious issue of whether the UK should remain in the EU customs union or leave it after Brexit.

The Irish border factors strongly into the argument, with supporters claiming that the customs union is the only way to prevent a return to the ‘hard borders’ of the past.

The debate could continue until late in the afternoon today, so immediate GBP/AUD exchange rate movement may not be forthcoming.

Market Concerns over BoE Speeches Leave GBP/AUD Exchange Rate Tight

The Pound (GBP) has kept close to opening levels against the Australian Dollar (AUD) today, before a couple of high-impact speeches from Bank of England (BoE) officials on Friday.

BoE policymakers could provoke significant GBP/AUD exchange rate movement on the day, but a lack of economic data has left the Pound flat at present.

Tensions over Commons Vote on EU Customs Union Keep GBP/AUD Exchange Rate Static

Another factor preventing significant Pound to Australian Dollar (GBP/AUD) exchange rate movement today has been uncertainty about how a House of Commons vote will turn out.

MPs will be discussing whether the UK should remain in the EU customs union or leave it after Brexit.

It is unclear how the nonbinding vote will turn out; if there is a majority push for or against continued membership then the Pound (GBP) could turn volatile against the Australian Dollar (AUD).

Australian Dollar to Pound (AUD/GBP) Exchange Rate Left Stable by Warning on AU Consumers

It has been a similarly quiet day for Australian economic announcements today, which has also prevented any major movement in AUD exchange rates.

The latest news has been a negative assessment of consumer confidence from Commonwealth Bank Chief Economist Michael Blythe.

Mr Blythe has warned that there may be lower spending in the future, saying:

‘The risk is that the consumer is now less responsive to good economic news and potentially more reactive on the downside.

‘Consumers could scale back spending by more than normal in response to a “shock”, accentuating any downturn.’

Pound to Australian Dollar Forecast: Will GBP/AUD Exchange Rate be Hit after BoE Speeches?

Looking ahead, there are still a number of factors that could cause Pound to Australian Dollar (GBP/AUD) exchange rate volatility before the end of the week.

These will be Friday’s GfK consumer confidence reading for April, along with Q1 GDP growth estimates and a pair of speeches from Bank of England (BoE) officials.

GfK’s confidence measure is expected to remain at -7 points, which could cause early losses for the Pound (GBP) against the Australian Dollar (AUD).

Pound exchange rates could be further worsened by the GDP estimates released later in the day – no annual change is predicted but a quarter-on-quarter slowdown has been forecast.

Rounding off the week with potential GBP/AUD volatility will be the speeches from BoE Governor Mark Carney and fellow policymaker Andy Haldane.

Mr Carney has erred on the side of caution in recent weeks, but if he and Mr Haldane support a near-term UK interest rate hike then the Pound could rally.

Chance of Australian Dollar to Pound Exchange Rate Volatility on RBA Interest Rate Decision

Next week, the AUD/GBP exchange rate could be influenced by a Reserve Bank of Australia (RBA) interest rate decision on 1 May and trade data on 3 May.

RBA officials are not expected to adjust interest rates from 1.5%, but an AUD/GBP exchange rate rise could still be caused by an optimistic outlook from policymakers.

Later in the week, the AU trade balance reading might trigger a Pound (GBP) to Australian Dollar (AUD) advance if the existing surplus shrinks.

Adam Solomon

Adam joined the team at TorFX soon after graduating from University in 2005 with a degree in Journalism. Since then Adam has advanced to become both Head of Trading and Head of Treasury. His keen interest in the currency market and knowledge of what drives exchange rates makes him perfectly positioned to produce regular market updates focused on the movements of the major currencies.

Contact Adam Solomon