Sterling has gained ground against the AUD during Tuesday’s trading, despite yesterday’s unsettling developments inside the UK Government.
UK PM Theresa May was fighting off questions today about the destabilisation of her Government, following the resignations of chief Brexit negotiator David Davis and Foreign Secretary Boris Johnson.
GBP/AUD rates have bucked the expected trend however, with Sterling putting pressure on 1.79 at today’s high. The AUD did find plenty of support around this threshold, moving back below 1.78 this afternoon.
The AUD, along with the other commodity-based currencies are under increasing pressure, due to a slowdown in global trade. There are concerns that President Trump’s trade tariffs on China and the EU are going to destabilise the global markets, causing investors to move funds away from any export driven economies and currencies such as the AUD. This is putting the AUD under strain, even with the events unfolding in the UK and sell-off of Sterling against some of the other major currencies.
The UK of course, is facing its own set of unique problems. UK Prime Minister Theresa May is seemingly losing control of her inner circle and with Boris Johnson’s resignation yesterday sending shockwaves through the market. The Pound itself is unlikely to gain any sustained support over the coming days, as this potential crisis evolves.
Theresa May was quick to try and dilute fears over the Government’s current Brexit strategy but the markets will likely remain sceptical until the time a deal is in place. This uncertainty may hinder any upward movement for the Pound, despite the current global climate and investors minimal risk appetite for the AUD.
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