GBP/AUD continues to rally on Thursday, surging to the highest level since March 2016. Currently, the pair is trading at 1.9127, up 0.35% as of 5:55 AM UTC.
The Aussie is losing ground as investors’ appetite for riskier assets faded after US President Donald Trump signed the bills that support Hong Kong protesters. As for the mass demonstrations, they continue to this day and have even intensified.
Trump angered China, which threatened to react. The situation doesn’t bode well for the ongoing trade negotiations between the two countries that have been in a trade war for over 16 months. Beijing said that any interference in the Hong Kong issue is doomed to fail.
China summoned US Ambassador Terry Brandstad. Vice Foreign Minister Le Yucheng told the ambassador to stop meddling in Hong Kong affairs and warned that such actions would negatively impact “cooperation in important areas,” probably hinting to the trade talks.
The bill, passed by the US Congress’ both chambers last week, requires sanctions against officials accused of human rights abuse or undermining Hong Kong’s autonomy. Another bill bans the export of weaponry to the city’s police.
Nevertheless, Trump said it was not his intention to cool relationships with China. The President admitted he didn’t agree with some portions of the bill. He said:
“I signed these bills out of respect for President Xi, China, and the people of Hong Kong. They are being enacted in the hope that leaders and representatives of China and Hong Kong will be able to amicably settle their differences leading to long term peace and prosperity for all.”
Elsewhere, the pound is backed by increased Brexit optimism as polls confirm once again that Prime Minister Boris Johnson’s party is about to win the election by a margin.
Yesterday, a model from YouGov showed that the Conservatives would win a majority of 68 in the UK parliament. Thus, the Tories would secure 359 seats out of 650, compared to the current 317 seats. That would be the best result for Johnson’s party since Margaret Thatcher’s win in 1987 elections. YouGov’s so-called Multilevel Regression and Post-stratification (MRP) model is quite relevant given that it accurately predicted the 2017 election.