GBP/AUD Exchange Rate Jumps as Rising Trade Tensions Bode Poorly for the Australian Dollar
The Pound Australian Dollar (GBP/AUD) exchange rate is trending higher this morning, with the ‘Aussie’ hit by heavy losses, sparked by the White House’s decision to push ahead with further tariffs against China.
At the time of writing the GBP/AUD exchange rate is currently up by around 0.2%, with the pairing having recouped all of its losses from earlier in the week.
Will the Australian Dollar (AUD) Exchange Rate Slump as Trade War Fears Grow?
The Australian Dollar’s (AUD) future looks increasingly gloomy today as another escalation in global trade tensions appears to suggest we could be hurling towards a full blown trade war between the world’s two largest economies.
This latest escalation comes as the US announced plans to pursue further tariffs against China, just days after the two nations imposed tit-for-tat tariffs on $34bn of the other’s goods.
The next round of tariffs with target $200bn worth of Chinese exports to the US and could come into effect as early as September.
Beijing responded by branding the move as ‘totally unacceptable’ adding that the ‘the behaviour of the US is hurting China, hurting the world and hurting itself’ and promising to implement its own countermeasures.
With Australian’s economy tied closely to its ability to trade with China and the rest of the world, AUD investors fear the possibly of a trade war could have a disastrous impact on domestic growth.
These fears are likely to hang over the Australian Dollar for the foreseeable future, potentially driving some heavy losses in the ‘Aussie’, especially if it leads to further delay of the Reserve Bank of Australia’s (RBA) next rate hike.
GBP/AUD Exchange Rate Forecast: Will Carney Speech Drive Gains in the Pound?
Looking ahead to this afternoon, the Pound Australian Dollar (GBP/AUD) exchange rate could be set for further gains as markets eye a speech by Bank of England Governor, Mark Carney.
With GBP investors coming around to the idea of an August rate hike, there is likely to be a lot of focus placed on Carney’s comments, with any hint that the BoE may be open to hike next month likely to help drive Sterling (GBP) higher.
Meanwhile the Australian Dollar (AUD) could be met by additional losses in the latter half of the week as a lull in domestic data leaves the currency exposed to further trade concerns.