GBP/AUD Exchange Rate Eases on Hopes of Pre-Christmas US-China Trade Deal
The Pound Australian Dollar (GBP/AUD) exchange rate dipped today, with the pairing currently trading around AU$1.923 on renewed hopes of a US-China trade deal emerging before 2020.
This follows reports of a hoped-for trade deal ahead of Sunday, in which the US and China are expected to announce some form of a ‘phase one’ trade deal.
Kenny Polcari, the Senior Market Strategist at Slatestone Wealth, commented:
‘They’re going to come out and say ‘we’ve got a deal … we’re working on tweaking, fine-tuning it. But, to show good faith, we’re not going to impose these tariffs.’ And then the markets will rally.’
With China being Australia’s main trading partner, this has provided a boost in market confidence for the risk-sensitive Australian Dollar today.
However, as the 15th December tariff deadline looms, some ‘Aussie’ traders are remaining cautious, with US President Donald Trump having just days to decide whether to impose around $160 billion tariffs on Chinese consumer goods.
According to one Reuters source, if Washington allows the tariffs to take effect ‘the US-China deal talks are likely done for the remainder of President Trump’s term’.
GBP/AUD Exchange Rate Dips on Heightened UK Election Uncertainty
The Pound (GBP) struggled against the ‘Aussie’ today after last night’s release of the updated YouGov MRP poll ahead of tomorrow’s general election.
The report indicated that the Conservative’s lead had narrowed with the Labour Party, further heightening the possibility of a hung parliament.
Chris Curtis, YouGov’s Political Research Manager, also urged caution:
‘Our latest and final poll shows that a small Conservative majority is likely, with the Tories taking 22 more seats than in 2017 and Labour losing 31.
‘But the margins are extremely tight and small swings in a small number of seats, perhaps from tactical voting and a continuation of Labour’s recent upward trend, means we can’t currently rule out a hung parliament.’
With just one day to go until the general election, we should expect further volatility for the Pound as markets focus ever closer on the intensifying political developments as the major parties push to secure last-minute votes.
GBP/AUD Outlook: Could the Pound Sink on a Hung Parliament?
Tomorrow’s UK general election will remain in firmly in focus, with any signs of the Labour Party closing their gap with the Conservatives – or a hung parliament – weakening the Pound on heightened political uncertainty over Brexit.
Australian Dollar (AUD) investors, meanwhile, will be awaiting tomorrow’s release of December’s Australian Consumer Inflation Expectations figure, which is expected to rise by 3.5%.
Tomorrow will also see the RBA’s bulletin report, with any signs of a dovish tone taken by the central bank likely weakening market confidence in the Australian Dollar.
US-China trade developments will also remain in focus for Australian Dollar traders tomorrow, with any signs of a pre-Christmas trade deal emerging between the two superpowers being AUD-positive.