GBP/AUD Exchange Rate Sinks despite Rising Concerns over Australia’s Coal Exports to China
The Pound to Australian Dollar (GBP/AUD) exchange rate fell by -0.3% today, with the pairing currently trading around AU$1.798.
The Australian Dollar (AUD) benefited from a stronger-than-expected Australian Westpac Consumer Confidence report for October, which beat forecasts and rose by 11.9%.
Bill Evans, Chief Economist at Westpac, said it was an ‘extraordinary result’:
‘Such a development must be attributable to the response to the October Federal Budget; ongoing success across the nation in containing the COVID-19 outbreak; and the expectation that the Reserve Bank Board is likely to further cut interest rates at its next meeting on November 3.’
AUD’s gains could be short-lived, however. Concerns continue to grow over China’s apparent rejection of coal imports.
As a result, this could severely limit confidence in Australia’s economy, which relies heavily on coal exports to China, the world’s second-largest economy.
Kerry Craig, global market strategist at J. P. Morgan Asset Management, commented:
‘There is still a clear symbiotic relationship between the two nations in as much as Australia is still reliant on exports to China and China is reliant on the higher quality coal and iron ore from Australia while it rebuilds its economy.’
AUD traders will be awaiting today’s speech from the Reserve Bank of Australia’s (RBA) Governor, Philip Lowe.
Any downbeat comments about Australia’s economy would be AUD-negative.
Pound (GBP) Falls as Brexit Uncertainty Drags on UK Market Confidence
The Pound (GBP) remains subdued on Brexit uncertainty today as post-Brexit trade talks enter their final day ahead of tomorrow’s October 15th deadline.
UK Chief Brexit Negotiator David Frost is likely to urge the Prime Minister to remain in talks.
Mr Forst will likely tell him that a post-Brexit trade deal may be difficult but not altogether impossible.
However, the EU’s Chief Negotiator, Michel Barnier, criticised Boris Johnson’s ‘third deadline’ on talks, leaving some GBP investors concerned that relations between the UK and the EU could be souring.
GBP investors will be awaiting today’s speech from Andy Haldane, the Bank of England’s Chief Economist.
Any downbeat comments about the future for the British economy – or hints of a negative interest rate – would prove GBP-negative.
GBP/AUD Forecast: No-Deal Brexit Fears Could Drag Sterling Down Deeper
Australian Dollar (AUD) investors will be paying close attention to tomorrow’s release of Australia’s Unemployment Rate report for September.
If joblessness continues to rise throughout Australia, the ‘Aussie’ would shed some of its gains.
Pound (GBP) traders will be looking ahead to tomorrow’s Autumn Forecast Statement from the HM Treasury.
Any significantly downbeat statement about Britain’s economy would prove GBP-negative.
Brexit developments, however, will remain in focus ahead of tomorrow’s EU Summit.
The GBP/AUD exchange rate could sink further if the likelihood of a no-deal Brexit later this year increase.