The AUDGBP exchange rate was higher into the weekend after the Bank of England taper met with a resurgent SNP part in Scotland. That has raised the talking point of independence once again and the UK will see further political risk weighing on the British pound. Australia’s treasurer has confirmed that the borders will remain shut until 2022 and this has seen the pound regain some ground. China’s foreign ministry also criticized the “wildness” of Australian politicians after the recent Belt and Road cancellation.
The AUD to GBP trades at 0.5590 and the Aussie dollar has threatened this level many times over the last few months.
Australian Borders Remain Shut Until 2022
Australia’s treasurer Josh Frydenberg has shot down any hopes of international travel or significant migration by the end of 2021, after stating that the country’s borders will reopen in 2022. Skilled migrants will be a focus of that reopening as the country needs a boost to its skills base.
Frydenberg spoke to The Age as he prepares to release the Federal Budget on Tuesday and he said the international border, which has been closed for over a year, will remain shut until it is deemed “safe to do so”. Australia’s vaccine rollout was slower than expected and that has hit the original forecasts of October for the reopening of tourism. The news will be a blow to Brits after the country was included in the newly published ‘green list’ from the UK government. It is also another blow to the hard-hit Aussie tourism and education sector as visitors and students remain locked out of the country.
China continues blame game in talks
China has levelled accusations of “insane suppression” and cancelled all economic talks after the government ripped up the Belt and Road deal. China’s Ministry of Commerce said the latest moves were caused by the “wildness of Australian politicians”. Foreign Ministry spokesman Wang Wenbin said Australia had a “Cold-War mentality and ideological bias” towards his nation”.
“It should stop the insane suppression targeting China-Australia cooperation, stop politicising and stigmatising normal exchange and stop going further down the wrong path,’ he said.
Australia said recently that the government would cancel the Belt and Road Initiative because it was “inconsistent with Australia’s foreign policy.” This has angered Australia’s largest export customer and is the latest in a series of criticisms and trade spats between the two. The relationship between the two soured when Australia joined a chorus of countries criticizing the Chinese response to the virus.
Exports have held up well out of China’s thirst for iron ore, but the latest move brings risk of further reactive actions and tariffs, which could hurt the Aussie recovery. The mining sector has been the shining light of the recovery down under.
The AUDGBP pair tested the 0.5600 level yet again on Friday and needs to get above here to spark a new trend. The pound has put that move in jeopardy with gains of 0.23% on Monday.