- Chinese exports jump +7.2% vs 0.2% expected
- Trump bans Chinese apps TikTok and WeChat
- Pound (GBP) supported by mini boom in housing prices
- Brexit concerns are revived as London’s financial gateway status is thrown into question
The Pound Australian Dollar (GBP/AUD) exchange rate is extending losses on Friday for a fourth straight session. The pair settled on Thursday -0.3% at 1.8173. At 08:15 UTC, GBP/AUD trades -0.05% at 1.8163.
The Australian Dollar, also known as a Chinese proxy, is weighing up rising US – Sino tensions against strong Chinese trade data. Data from China showed that exports soared 7.2% compared to a year earlier. This is significantly ahead of the 0.2% increase that analysts had forecast and suggests that the economic recovery in the world’s second largest economy could be sustainable.
Recent data has shown that the Chinese economy is gradually emerging from a record economic contraction in the first quarter. However, the recovery remains fragile as Chinese consumer spending has yet to pick up.
The strong Chinese export numbers are being offset by rising US – Sino tensions as President Trump takes aim at Chinese tech stocks. Trump has given the US 45 days until popular Chinese apps TikTok and WeChat will be banned. This is a move that Beijing is unlikely to take lying down. Fears that the White House could be igniting a full-on tech war is unnerving traders and dragging on sentiment.
The Pound is trading mixed versus its major peers. On the one hand encouraging housing data is underpinning sterling. However, on the other, Brexit concerns are acting as a drag as Brussels looks to limit London’s financial gateway status.
According to Nationwide, the UK housing market experienced a mini boom in July. House prices jumped 3.8% on the year, analysts had been expecting a 2.5% increase. On a monthly basis house prices were up 1.6% month on month in the largest monthly increase this year. This is a good sign. However, with job losses expected to rise over the coming months, house process could come under pressure.
