Easing tensions in US China trade war: Does this provide the Aussie Dollar with some support?
The Australian dollar has made gains of late against the majority of currencies due to several contributing factors. The US/China trade war is currently going through a tentative truce stage which has eased investor concerns on commodity based currencies such as the Australian dollar. Due to Australia’s heavy reliance on China purchasing it’s exports the truce has seen investors regains some confidence in the Aussie dollar.
RBA interest rate rumours
There were also rumours of a potential rate cut from the Reserve Bank of Australia (RBA) this month which failed to materialise. This was also good news as it means the situation with the Australian economy may not be as bad as envisioned.
Pound suffering from political uncertainty
Sterling however is having a torrid time. The lack of a PM and with Brexit in complete limbo there seems little justification for any significant Sterling spike at present. I am afraid until we have some sort of clarity on both matters the pound will remain fragile.
Boris has also stated his willingness to bring a no deal scenario back to the table in order to negotiate a more favourable deal with Brussels. This is not good for Sterling, the higher the probability of a no deal the weaker you would expect Sterling to become.
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