GBP/AUD Exchange Rate Tumbles as Brexit Uncertainty Grows Following Customs Denial
The Pound to Australian Dollar (GBP/AUD) exchange rate has fallen back this morning as the UK dismissed reports it could remain in the EU customs union.
At the time of writing the GBP/AUD exchange rate has stumbled around 0.3% from today’s opening levels as fresh Brexit uncertainty pressures Sterling sentiment.
Pound Australian Dollar (GBP/AUD) Exchange Rate Slumps as UK Dismisses Customs Union Reports
The Pound Australian Dollar (GBP/AUD) exchange rate is back on the defensive this morning as Downing Street has moved to deny reports the UK could stay in the EU customs union past 2021.
The dismissal comes hot on the heels of a report from the Daily Telegraph that the UK could remain aligned with the EU customs union until a technological solution can be found for the Irish border, something which triggered a rally in Sterling (GBP).
Arriving for an EU Summit in the Balkans, Prime Minister Theresa May said:
‘The United Kingdom will be leaving the customs union. We need to be able to have our own independent trade policy, we want as frictionless a border [as possible] between the UK and the EU so that trade can continue and we want to ensure there is no hard border between Northern Ireland and Ireland.’
With May’s cabinet still appearing deadlocked on what the future relationship with the EU should look like, this has done little to clear up the uncertainty surrounding the direction of the UK’s Brexit plans.
Pressure is now mounting for the government to finalise its approach to Brexit by the end of June in preparation for the next major EU summit, with the continued uncertainty likely to frustrate any GBP investors.
Australian Dollar (AUD) Exchange Rate Strengthens Following Rebound in Employment Growth
The Australian Dollar (AUD) meanwhile, is ticking higher today, despite an unexpected uptick in domestic unemployment.
According to data published by the Australian Bureau of Statistics (ABS), the national unemployment rate rose from 5.5% to 5.6% in April, due to a sharp rise in participation level.
However it appear markets were willing to overlook this slide as they focused on a stronger-than-expected pick up in employment growth, bringing an end to two months of declines.
Paul Dales, Chief Australia & New Zealand Economist at Capital Economics said:
‘While the exceptionally strong rates of jobs growth throughout 2017 are unlikely to return, leading labour market indicators point to a decent enough rate this year.’
GBP/AUD Exchange Rate Forecast: Will BoE Optimism Rise in Wake of Rising Wages?
Looking ahead the GBP/AUD exchange rate may be able to find its feet again later this evening following a speech by the Bank of England’s (BoE) Andy Haldane.
This will be the first official communication from the BoE following Tuesday’s report that the UK’s year-long pay squeeze had come to an end.
This could see the Pound (GBP) exchange rate strengthen if Haldane appears optimistic on the chances of this allowing for a rate hike by the end of 2018.
Meanwhile the Australian Dollar (AUD) may lose some momentum over the next week or so as a lull in domestic data leaves the currency vulnerable to external pressures.