AUD Finds Support Following Potential Breakthrough in US/China Trade War

Could a Reserve Bank of Australia interest rate cut offer GBP/AUD some support

GBP/AUD rates have remained fairly flat throughout the trading week, with the pair currently trading at around 1.82.

Sterling had made significant inroads against the AUD over the past month, gaining almost 10 cents at the high. To put this in perspective, any investors transferring £100,000 GBP/AUD, would gain almost 10,000 AUD more than they would have at this time last month.

The Pound’s rise has been well documented over recent days, with the EU seemingly softening their stance on a possible Brexit deal with the UK. As our regular readers will know Brexit sentiment has been driving Sterling’s value over recent months, with a lack of confidence in the UK’s long-term future sapping investor confidence in GBP.

Whilst there are still likely to be a number of hurdles to overcome, not least the infighting in the Conservative party in regards to the terms of the prospective deal, it does seem as though there is once again some light at the end of the tunnel.

Having said that the UK Government published 28 notices yesterday aimed at businesses and the public, in order to help prepare themselves for a potential no-deal scenario. With this in mind, the Government clearly feel it is an outcome they have to prepare for however great the risk may be.

Looking at the Australian economy, the AUD has found a level of support this week, after there were signs that the current trade war between the US & China may be softening. The US have taken steps to reach out to China to restart trade discussions, which is likely to alleviate some of the pressure that was building on the AUD, due to the close trade links between Australia & China.

There were also some positive employment figures released overnight, showing that 44,000 new jobs were created during August. This again is likely to help support the AUD around the current levels against GBP as the trading week comes to a close.

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