Pound Australian Dollar (GBP/AUD) Exchange Rate UP as Trump Confronts World on Trade

June 25, 2018 – Written by John Cameron

Quiet Data Day for UK – Pound Australian Dollar (GBP/AUD) Exchange Rate Capitalises on Risk Averse Markets

The Pound Australian Dollar (GBP/AUD) Exchange rate traded higher on Monday, bolstered by last week’s rather hawkish Bank of England (BoE) rate decision and collapsing risk appetite amongst traders.

With no significant UK data due today investors were left to digest last week’s BoE rate decision, with news that the Bank’s Chief Economist, Andy Haldane had thrown in with the Hawks still giving the Pound a small lift.

Investors are now hopeful that the bank’s policymakers will be in agreement for a rate hike in August this year, with many hoping that a speech tomorrow by BoE Ian McCafferty will lay the groundwork.

US on Trade Warpath – Australian Dollar (AUD) Exchange Rates Tumble

The primary mover for the Pound Australian Dollar (GBP/AUD) exchange rate today was shifting risk appetite amongst the markets, with news that the Trump administration is moving to limit Chinese investment in US businesses sending investors scurrying.

These limitations included measures to prevent firms with at least 25% Chinese ownership from acquiring American companies within robotics, aerospace and other technology sectors – what the White House labelled ‘industrially significant technology’.

Beyond this, the US President continued to confront world superpowers on trade, warning that countries with tariffs against the US should remove them, or face reciprocity and more:

‘The United States is insisting that all countries that have placed artificial Trade Barriers and Tariffs on goods going into their country, remove those Barriers & Tariffs or be met with more than Reciprocity by the U.S.A. Trade must be fair and no longer a one way street!’

Any escalation between the US and China bodes poorly for Australia – with both nations being major export markets for Australian commodities.

Pound Australian Dollar (GBP/AUD) exchange Rate Forecast: EU Council Meeting & Brexit in the Spotlight

The Pound Australian Dollar (GBP/AUD) exchange rate could see greater volatility this week as investors react to the EU’s Council meeting (starting on the 28th) and the Brexit soundbites and headlines that will ensue.

Markets are ultimately craving a better degree of clarity on the UK’s future outside of the EU, with Sterling bulls hoping for signs of progress in negotiations – especially on issues such as the Irish border.

A lack of progress, however, could severely weigh on demand for the Pound, limiting business investment and potentially pushing the Bank of England away from a rate rise in the coming months.

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TAGS: Pound Australian Dollar Forecasts