The Pound Australian Dollar (GBP/AUD) held steady today as ‘Aussie’ traders have been buoyed with a risk-on attitude ahead of tomorrow’s G20 summit in Japan.
This came following comments from the US Treasury Secretary, Steven Mnuchin, who said yesterday:
‘We were about 90% of the way there [with a deal] and I think there’s a path to complete this.’
As China is Australia’s closest trading partner, optimism over a US-China trade deal has encouraged traders to invest in the risk-correlated ‘Aussie’.
Doubts have begun to creep in over China’s response, however, holding back some of the Australian Dollar’s gains.
Gao Feng, a Spokesman for the Chinese Ministry of Commerce, warned the US, saying that its position on the trade war had remained unchanged.
Mr Feng asserted:
‘We urge the U.S. to immediately cancel its pressure and sanction measures on Huawei and other Chinese companies, and push for the stable and healthy development of China-U.S. trade relations.’
There are no Australian economic data releases due out today, with ‘Aussie’ traders instead focusing on global political developments.
The Pound, meanwhile stabilised against many of its competitors today following comments from Boris Johnson, the Tory leadership favourite, in which he said a no-deal Brexit was a ‘million-to-one’ in odds.
Mr Johnson said:
‘It is absolutely vital that we prepare for a no-deal Brexit if we are going to get a deal. But I don’t think that is where we are going to end up.’
This bought relief to many Sterling traders and has eased fears of a chaotic departure from the European Union on 31 October.
The Japanese Foreign Minister Tarō Kōno has also urged both future candidates for British Prime Minister – Boris Johnson and Foreign Minister Jeremy Hunt – that they must not lead the UK into a no-deal scenario.
Mr Kōno commented:
‘There are over 1,000 Japanese companies operating in the United Kingdom, so we are very concerned with this no-deal Brexit.’
With no UK data releases due out today, Sterling has remained steady on relatively upbeat political news.
Sterling traders will be looking ahead to tomorrow’s UK growth figures for the first quarter, which are expected to hold at 0.5%.
Tomorrow will also see the GfK consumer confidence figures for June.
The Pound Australian Dollar (GBP/AUD) exchange rate will remain sensitive to developments surrounding G20, however.
Sterling could begin to fall against the ‘Aussie’ if US and China concede on a trade deal, with Australian markets befitting from heightened risk appetite.