GBP/AUD Exchange Rate Steady Following US-China Trade Talk Delay
The Pound to Australian Dollar (GBP/AUD) exchange rate is mostly rangebound so far this morning, amidst the news that a review into the US-China phase 1 deal has been delayed.
At the time of writing the GBP/AUD exchange rate is trading at around AU$1.8240, virtually unchanged from this morning’s opening rate.
Australian Dollar (AUD) Steady as US-China Trade Review Postponed
The Australian Dollar (AUD) is trading in a narrow range against the Pound (GBP) this morning, following the news that a six-month review of the US-China phase one trade deal had been postponed over the weekend.
The two sides had been scheduled to hold a six-month compliance review on Saturday, but the talks between US Trade Representative Robert Lighthizer, US Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He were delayed due to a reported ‘scheduling conflict’.
Sources suggest the delay was also to provide China with more time to fulfil its commitment to purchase more US exports.
China is reportedly well behind targets to increase purchases by $77bn against 2017 levels.
Observers suggest the extra time for compliance will help to salvage the deal, and allow President Donald Trump to hail the deal as a major win in the lead up to the US election.
Mary Lovely, a senior fellow with the Peterson Institute for International Economics, suggests:
‘I think Trump is a little afraid that this triumph of his will be hung around his neck, but more purchases and a bit of a delay would clearly help. But he does own it, so they’re going to have to put the best face on it.’
The news that more time was being given helped to cheer market sentiment and buoy the ‘Aussie’ at the start of the week as it eases fears the deal was under threat following the recent flare up in tensions between the US and China.
Pound (GBP) Flat amidst Brexit Uncertainty
At the same time, the Pound (GBP) is muted this morning amidst concerns over Brexit.
This comes as the EU’s financial services chief, Valdis Dombrovskis, warned that the City of London may have to wait beyond 2020 to learn whether it has retained access to the whole of the EU’s market, known as equivalence provisions.
According to Dombrovskis, the EU’s own regulations are currently in flux due to a recent overhaul.
This will prove a major headache for the UK’s vital financial sector and could result in regulators in the UK needing to strike agreements with counterparts on a country-by-country basis.
While Brexit talks will resume on Tuesday, the way in which the EU handles its equivalence provisions means these will not be part of negotiations.
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