The Australian dollar shot up over night after the release of China’s positive trade numbers for December were revealed. Being closely linked in trade with China, the Aussie economy also received an uplift after the news surfaced. With a recent run of bad luck for Australia, this data and the upcoming signing of the US-China trade deal may be just what the currency needs to start a turnaround. Meanwhile, the GBP has suffered further losses after bets are increasing on a Bank of England interest rate cut sometime soon. However, strategists remain positive that the drop in the pound will only be momentary and it should regain footing relatively quickly.
AUD Receives Boost From Positive China Data and Trade Deal
The Australian dollar was given a boost earlier today after China’s December trade figures were revealed. The numbers from the trade office showed that exports had risen by 7.6% in December, which was a significant increase from November’s decline of 1.3%. Reuters had expected exports to grow by only 3.2%. Meanwhile, imports rose by 16.3% for the month of December, an impressive growth and the fastest rate since October 2018. Australia benefitted from this positive data release as two thirds of Australian goods are shipped to China. The positive figures also pointed towards evidence of a positive reaction to the announcement of the first phase of the trade deal agreed with the United States.
GBP Suffers Losses After BoE Interest Rate Cut Uncertainty
After the recent comments made by both Mark Carney, governor of the BoE and a member of the BoE’s Monetary Policy Committee which hinted at a potential interest rate cut for the UK in the upcoming months, the GBP fell. With the decline of the pound, strategists at BMO Capital Markets suggest that the window for buying a weaker GBP could potentially only be open for a short time as the pound may recover and regain losses, so its current weakness may only be short-term. The implied odds of an interest rate cut have risen above 52% to be delivered at month-end, which is up from just 5% last week.
For the GBP, the Bank of England will remain the talking point for the direction of the currency as politics took a backseat following the Conservative win in December. Negotiations from the Brexit deal are ongoing however and any remarkable outcomes will likely affect the pound.
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