GBP/AUD Exchange Rate Flat on Returning US-China Trade Talk Hopes
The Pound Australian Dollar (GBP/AUD) exchange rate held steady today with the pairing trading around AU$1.799 after September’s Australian Westpac consumer confidence eased from 3.6% to -1.7%.
Diana Mousina, Senior Economist at AMP Capital, commented:
‘There is a risk that the continual negative news around the domestic economy talks consumers into thinking that conditions are weaker than they actually are. The same is true of all the recession talk.’
However, the risk-sensitive Australian Dollar’s losses were buffered by renewed hopes over improving US-China trade relations. This follows China’s unveiling of 16 types of products that will be exempt from additional tariffs on US imports ahead of preparations for their latest trade talks in October.
Peter Navarro, a US Senior White House Advisor, has played down US-China trade deal hopes, saying:
‘If we’re going to get a great result, we really have to let the process take its course… People need to understand this: the tariffs on China are our best defense against China’s economic aggression and best insurance policy – this is important – the best insurance policy that China will continue to negotiate in good faith.’
GBP/AUD Exchange Rate Rangebound as Labour’s Deputy Leader Calls for Unequivocal Backing of Second Referendum
The Pound (GBP) failed to gain against the ‘Aussie’ despite Labour’s Deputy Leader Tom Watson calling for his party to ‘unambiguously an unequivocally back remain’ and to push for a referendum before a general election.
Mr Watson said:
‘[Prime Minister] Boris Johnson has already conceded that the Brexit crisis can only be solved by the British people. But the only way to break the Brexit deadlock once and for all is a public vote in a referendum. A general election might well fail to solve this Brexit chaos.’
As a result, this provided some relief for UK markets, for if Labour unequivocally backs a second-referendum this may mean they could win over voters from the Liberal Democrats, thus further bolstering their chances in a general election against the hard-Brexiter Conservative Party.
Due to no UK economic data being released today, the GBP/AUD exchange rate is likely to be driven by Brexit developments.
Any indications that Boris Johnson could move forward with a deal with the European Union – drawing up a compromise for the Irish backstop, for example – would prove Pound-positive.
GBP/AUD Outlook: Could ‘Aussie’ Rise on Improving US-China Trade Relations?
Pound investors will be looking ahead to tomorrow’s release of August’s RICS housing price balance, which is however expected to ease from -9% to -11%.
‘Aussie’ traders will be awaiting tomorrow’s publication of September’s Australian consumer inflation expectations. Any signs of improvement could improve the AUD/GBP exchange rate.
Tomorrow will also see July’s Australian investment lending for homes.
The GBP/AUD exchange rate will likely remain driven by geopolitical developments this week, with US-China trade developments remaining in focus. Any indications of easing tensions between the two superpowers would buoy the ‘Aussie’.