The Pound has continued to make gains vs the Australian Dollar after it emerged that the Chinese have put an indefinite ban on the amount of Australian coal coming in to the country.
The amount has been capped at 12mn tonnes per year and as China accounts for 34% of Australia’s export market it is a big concern for the Australian economy and this has been reflected in the Australian Dollar which has weakened to its lowest level vs Sterling since October 2018.
Clearly this issue could become a big problem for the Australian Dollar and Australia’s Trade Minister Simon Birmingham is seeking some clarity on the situation before the issue gets worse and RBA governor Philip Lowe has said ‘if it were to the sign of a deterioration in the underlying political relationship between Australia and China then that would be more concerning.’
Yesterday morning Australian unemployment came out at 5% which was in line with expectation and typically this would have helped the Australian Dollar to strengthen vs the Pound but it did little to impact GBPAUD rates as the markets focused on the tensions between China and Australia.
During the next few days and as we come to the end of the month there is little economic data due out for Australia so the coal story is likely to dominate the next few days for the Australian Dollar.
In the meantime the UK may be holding the next vote on Brexit on 27th February and at the moment it appears that the deal is far from being approved so I expect another loss for the Prime Minister in the House of Commons.
This could give the Pound a boost as it means that Brexit may not be happening 5 weeks from today and the likelihood is that Article 50 is extended.
Although this will not solve anything it does mean that the finite period of uncertainty is removed and this could provide the Pound with a lift against the Australian Dollar.
If you would like to save money on exchange rates compared to using your own bank or another broker then contact me directly and I look forward to hearing from you.
Tom Holian [email protected]