Pound to Australian Dollar forecast: Could the escalating tensions between the US and China weaken the Australian Dollar?

Australian Dollar Retreats Against the Pound as Trump Threatens US-China Trade War

Earlier this morning the pound to Australian dollar exchange rate traded close to the 1.80 interbank threshold which it has remained below for over a month now. The Australian dollar has been coming under pressure as the trade war talks between the US and China appear to have deteriorated quite drastically over the past few weeks. This has resulted in a sell-off within global stock markets.

US stocks markets record biggest fall in 2019: US China trade war ramps up

Yesterday, the Dow Jones fell by around 900 points at its lowest stage and over the past month the main US equity markets along with China’s main indexes have lost considerable value as a result in the breakdown in talks. Yesterday US President Donald Trump accused China of manipulating their currency as the Chinese Renminbi has hit its lowest level in 11-years. Trump believes this is to ensure China remains competitive and the hit from the US trade tariffs doesn’t impact them to the extent the US had hoped.

With Australia’s economy being closely linked to China it’s possible that we could see a slowdown in Australia, and perhaps a weaker currency which would help the struggling Pound breach the 1.80 interbank exchange rate once again.

UK Services data better than expected

Yesterday it emerged that the UK’s most important sector of its economy performed well during July, as Services data impressed and came out better than expected. This has done little to boost sentiment surrounding the economy moving forward though, and no-Brexit deal rhetoric along with the US-China trade tensions remain a focus with some economists believing that the UK could fall into recession. Gross Domestic Product figures will be released later this week with expectations for 0% growth during the 2nd quarter of this year to be announced. A negative figure could see the Pound negatively impacted so feel free to register your interest if you wish to be kept updated regarding this.

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