Hints of UK EEA Membership Push Pound to Australian Dollar (GBP/AUD) Exchange Rate Higher

GBP/AUD Exchange Rate Rises on Hopes of ‘Soft Brexit’

Comments made by the Norwegian Prime Minister have raised demand for the Pound (GBP) today, pushing it up against the softer Australian Dollar (AUD).

Raising hopes of a ‘soft Brexit’ after the UK leaves the EU, Norwegian PM Erna Solberg has stated that she has no objections to the UK joining the European Economic Area (EEA).

Under such conditions, the UK would leave the EU but remain in the single market, providing a ‘best of both worlds’ scenario.

UK PM Theresa May is due to meet cabinet officials on Tuesday to discuss post-Brexit trade, so a positive reaction to the Norwegian suggestion could prompt further Pound gains.

However a complete Pound to Australian Dollar rally has been prevented today by the latest UK retail footfall stats, which fell sharply in April.

Although March’s -6% decline was written off as a symptom of heavy snowfall during the month, there haven’t been any similarly convenient explanations for April.

AUD/GBP Exchange Rate Dips as Polls Suggest Falling Coalition Support

The Australian Dollar (AUD) has fallen against the Pound (GBP) today, owing to AUD trader concerns about the next Federal Election, due before the end of 2019.

The latest opinion polls have suggested that the opposition Labour party is the more favoured party, despite a recent budget reveal from the Coalition.

The Federal Election is the next Australian political event on the calendar and could cause further AUD volatility if it looks like a change of leadership is likely.

GBP/AUD Exchange Rate Forecast: Are Pound Losses ahead on Slowing UK Wage Growth?

This week, Pound/Australian Dollar (GBP/AUD) exchange rate movement may be caused by a range of UK jobs market stats out on Tuesday.

UK jobless claims, the unemployment rate and wage growth data will be released on Tuesday morning.

The main focus for GBP traders will be the wage data, which is expected to show a faster pace of growth in March without bonuses included.

There is still a risk of Sterling losses, however, as average earnings with bonuses are predicted to drop from 2.8% to 2.6%.

Such a slowdown could devalue the Pound and trigger a GBP/AUD exchange rate drop; a falling reading risks the pace of inflation overtaking wages again and harming consumers.

Australian Dollar traders will also be paying attention to jobs market data this week, but not before Reserve Bank of Australia (RBA) minutes come out on Tuesday.

The documents will reveal policymaker opinions at the latest meeting and could boost the AUD with hints of monetary policy adjustment in 2018.

More concretely, the Australian Dollar to Pound exchange rate could firm on Thursday if higher employment (particularly full-time employment) is reported.

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