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Pound Sterling Australian Dollar (GBP/AUD) Exchange Rate Flat as China Will Not Immediately Retaliate Against US Tariffs

August 29, 2019 - Written by John Cameron

September US-China Trade Talks Leaves Pound Australian Dollar (GBP/AUD) Exchange Rate Flat

The Pound Sterling Australian Dollar (GBP/AUD) exchange rate remained muted and the pairing is currently trading at an inter-bank rate of AU$1.8092.

On Thursday, reports revealed that September face-to-face talks between the US and China are being discussed.

Speaking to reporters, Chinese Ministry of Commerce spokesman Gao Feng said China would not immediately retaliate against the latest US tariff hike announced last week.

Gao Feng emphasised the need to deescalate tensions between Washington and Beijing and noted:

‘China has ample means for retaliation, but thinks the question that should be discussed now is about removing the new tariffs to prevent escalation of the trade war.

‘China is lodging solemn representations with the US on the matter.’

Added to this, US Treasury Secretary Steven Mnuchin stated it is expected that Chinese officials will visit Washington.

On Wednesday, Mnuchin stated:

‘We continue to have conversations. We’re planning for them to come.’

However, this could do little to buoy the risk-sensitive 'Aussie'.

Australian Dollar (AUD) Muted as New Home Sales Slump

Meanwhile, the Australian Dollar remained muted against Sterling following disappointing new home sales data.

July’s HIA new home sales slumped by -7.2% following June’s fall of -12.1%.

Added to this, Australian private capital expenditure fell by -0.5% during Q2 2019.

This likely left the ‘Aussie’ under pressure, overshadowing the slight ease in tensions between the US and China.

Increased Chances of No-Deal Brexit Leave Sterling (GBP) Flat

Sterling remained under pressure following Wednesday’s announcement that Prime Minister Boris Johnson had scheduled the Queen’s Speech for 14 October.

This means parliament will be prorogued from the second week of September until 14 October, limiting the time for MPs to prevent a no-deal Brexit.

However, the Prime Minister has denied claims he is attempting to prevent his Brexit plans from being stopped by MPs.

Sterling was left under pressure as the chances of a no-deal Brexit and a vote of no-confidence increased.

Commenting on this, Marshall Glitter, senior strategist at ACLS Global noted:

‘The only certainties are that a no-deal Brexit is even more likely, and that uncertainty has risen. Both are negative for the Pound.’

Pound Australian Dollar Outlook: Will Higher Than Expected Aussie Building Permits Buoy AUD?

Looking ahead to Friday morning, the Pound (GBP) could slide against the Australian Dollar (AUD) following the release of the UK consumer confidence.

If August’s GfK consumer confidence slides further than expected Sterling sentiment could be left dampened.

Meanwhile, the Australian Dollar could edge up against the Pound following the release of the Aussie building permits.

The Pound Australian Dollar (GBP/AUD) exchange rate may slide if the number of permits granted in July rises higher than expected.

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