GBP/USD: Pound vs. Dollar Volatile Due to Trump Trade War

GBP is flat against AUD on Friday.

  • Trading in the Aussie dollar (AUD) was choppy on rising US/China trade risks
  • US President Trump will hold a press conference on China today
  • EU’s De Rynck talks down chance of fisheries agreement
  • Post-Brexit trade talks resume next week – Real time exchange rate

GBP/AUD was down by 11 pips (-0.06%) to 1.8546 as of 4pm GMT.

The currency pair dropped below 0.85 before recovering to above 0.86 and then later settling near the flat line. Yesterday the exchange rate rose +0.31% but for the week it is lower by -0.44%.

GBP: Among weakest currencies this month

Sterling narrowly avoided another new 7-month low on Friday as traders sold it down early on but weren’t able to keep up the downwards momentum.

The pound has been among the weakest currencies in the G10 this month amid renewed Brexit concerns and talk of negative interest rates in the United Kingdom. Next week marks the final occasion negotiators from the UK and EU will meet before a scheduled summit at the end of June.

A top EU advisor noted on Friday that the UK “must find space for compromise” in the upcoming talks – specifically on fisheries policy which he described as a “tall order to get an agreement” in time.

AUD: Trump press conference on China / Hong Kong

Us President Trump scheduled a press conference for 18:00 GMT today and it has contributed to a drop in forex volatility beforehand.

Most experts seems to agree that Trump won’t take any drastic action on China over Hong Kong but the risk of him doing so is appreciated. The wider issue of US-China tensions has so far done little to hold back gains in the Australian dollar, suggesting little concern on the behalf of investors.

The logic in markets seems to be that Trump will not want to risk the phase one trade deal, something he considers a signature policy achievement. Revoking Hong Kong’s Special Status with the US remains a possibility but would be a local issue for Hong Kong and not something that need weigh on Australia’s raw material exports to China or the global economy.


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