The British pound is lower against the Australian dollar on Wednesday.
- Pound-Aussie exchange rate nears 1-year low
- US / China tensions – Houston Texas China consulate to close
- Pound turns lower with stock markets before Tesla/ Microsoft earnings
- ‘No deal’ rumours resurface before Boris’ July deadline for EU/UK trade arrangement
GBP/AUD was down by 31 pips (-0.17%) to 1.7828 as of 4pm GMT. This week the exchange rate is lower by -0.76%.
The currency pair gave up yesterday’s close near 0.785 early on and dropped as far as 0.77 before recovering almost all the day’s losses. Yesterday it fell -1.04%.
GBP: Post-Brexit concerns weigh again
Sterling is closing in a one-year low against the Australian currency, in what is now a 4-month old downtrend that started at the peak of fright about the pandemic in financial markets.
The pound seemed to lose ground after an article in the Daily Telegraph, which cited sources saying the British government now has the ‘working assumption’ that a deal cannot be done in time for the July deadline suggested by PM Boris Johnson. A ‘deadlock’ over fishing rights, governance, the role of the European Court of Justice (ECJ) and so-called level playing field restrictions is making a deal hard to grasp according to the paper.
AUD: Aussie brushes off China consulate closure in Texas
There is a big test coming up for all ‘risk on’ trades, including the British pound after the close on Wall Street when Tesla and Microsoft report quarterly earnings. Both companies have seen share prices rise significantly, despite all the risks associated with the coronavirus pandemic. Microsoft is up 32% year to date and 50% over 12-months. Tesla is up a mind-melting 275% year-to-date with a 12-month return of over 500%.
US China tensions are still escalating on the diplomatic level but have yet to really spillover into international trade, barring the moves in the UK and France against China 5G tech company Huawei. While the two nations are just ‘talking the talk’ and so long as the phase one trade deal remains intact, investors have been able to brush over the tensions, keeping the Aussie bid.