The pound to Australian dollar exchange rate is still finding support with rates sitting at 1.8550 for the GBP vs AUD pair despite the ongoing Brexit uncertainty in the UK. The Australian dollar has come under pressure over the last week following the decision by Donald Trump to deliver on promises made to impose tariffs on $200 billion worth of Chinese imports which has resulted in Australian dollar weakness. China has since retaliated by imposing tariffs on $60 billion worth of American imports.
There is hope that some agreement between the leaders Donald Trump and Xi Jinping can still be reached and it should be highlighted that the tariffs won’t actually take effect until the Chinese goods that shipped last Friday actually reach American soil. The next meeting between the US and China will take place at the G20 summit in Japan and the markets will be awaiting any developments on trade.
The Australian dollar remains sensitive to these trade developments as a commodity currency and the fact that Australia is such a large export market for China. A good trade deal would be very welcome news for the Australian dollar although there is still every chance that the trade war could escalate and turn in to a global trade war, something that would be negative for Australian dollar exchange rates.
In the UK it has been announced that there will be a fourth and final vote in parliament to try and push through the existing deal on Brexit. Cross party talks continue but with a lack of agreement and the difficulty in finding enough support in the House of Commons it seems unlikely the deal will be voted through.
The EU elections next Friday could be a very good indicator of what is to come and those looking to buy or sell Australian dollars would be wise to plan around this event. A major shift away from the two major political parties in the UK towards the Liberal Democrats and the newly formed Brexit Party could see a major market reaction for GBP to AUD. If there is a huge movement towards the Brexit Party headed up by Nigel Farage then GBP AUD could fall lower.
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