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Pound to Australian Dollar Exchange Rate Outlook: GBP/AUD Steadies as US-China Edges Closer to 'Epic' Trade Deal

April 5, 2019 - Written by John Cameron

The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate steadied today following the announcement from US President Donald Trump that US-China trade talks were edging closer to an ‘epic’ trade deal.

Australia’s economy is closely tied to China’s, and with signs of a consensus emerging between the two superpowers, this has benefited the risk-sensitive ‘Aussie’.

Trump said yesterday during an Oval Office appearance:

‘We are rounding the turn. We'll see what happens. We have a ways to go but not very far.’

There is no Chinese data today due to a Bank Holiday celebrating the Ching Ming Festival, while Australian economic stats are also thin on the ground until next week.

Sterling, meanwhile, has benefited from news that Donald Tusk, the President of the European Council, would push for a possible 1-year extension to the Brexit process.

GBP/AUD Exchange Rate Flat as Worries on No-Deal Brexit Haunt UK Markets

Many Pound traders are remaining cautious, however, as the previous extension until 12 April was condition on Prime Minister Theresa May passing her withdrawal through Parliament. As this has not happened, it is raising some concerns that the extension could be rejected.

Donald Tusk said:

‘The only reasonable way out would be a long but flexible extension. I would call it a ‘flextension’. How would it work in practice? We could give the UK a year-long extension, automatically terminated once the withdrawal agreement has been accepted and ratified by the House of Commons.’

Today, meanwhile, saw the publication of the UK Halifax house prices figures for March, which came in at a disappointing -1.6%.

Russell Galley, a Managing Director at Halifax, commented:

‘Industry-wide figures show that the number of mortgages being approved remains around 40 per cent below pre-financial crisis levels, and we know that lower levels of activity can lead to bigger price movements.’

GBP/AUD Forecast: Sterling Could Rise on Article 50 Extension

‘Aussie’ traders will be looking ahead to next week’s data releases, which will see the publication of the Australian home loans figures for February on Tuesday.

Many Australian Dollar investors will, however, be paying close attention to developments between the US and China over their imminent trade deal, and with any indications that this could be as ‘monumental’ as Trump promises, the ‘Aussie’ could soar.

The Pound to Australian Dollar exchange rate will remain fixated on Brexit developments next week, and with the 12 April deadline ticking down, any indications that the EU will concede on an extension to Article 50 would greatly benefit Sterling.

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