Fears of Further US Protectionist Policies Drives AUD/GBP Lower
The Australian Dollar Pound (AUD/GBP) exchange rate plummeted on Friday as concerns over US trade policy weighed heavily on currency markets.
At the time of writing AUD/GBP is trading around 0.3% lower, with US trade tensions driving the pairing to a 20-month low.
Australian Dollar (AUD) Weakened by Further US Trade Concerns
The Australian Dollar slumped even further against the Pound and most of its other peers on Friday as risk appetite continued to be weakened by US policy concerns.
The latest concerns have been prompted by reports from US media that Trump is planning to sack his National Security Adviser H.R. McMaster.
It is suggested the move has been driven by McMaster’s decision to side with former chief economic advisor Gary Cohn on warning Trump against implementing his steel and aluminium tariffs.
The reports come just days after the firing of Secretary of State, Rex Tillerson and has left investors concerned about the direction of future US policy,
Many fear that the shake up in the White House will see Trump choose to appoint those more amenable to his protectionist policies.
This will in turn stoke further fears that the US could spark a global trade war, something that could have a considerable impact on the ‘Aussie’ in the months to come.
Sean Callow, senior currency analyst at Westpac said;
‘Should the US-driven trade tensions deepen in the months ahead, the Australian dollar is likely to be one of the currencies hardest hit, given Australia’s current account deficits and its heavy reliance on China for commodity exports.’
AUD/GBP Forecast: BoE to Discuss Possibility of May Rate Hike?
Looking ahead to next week’s session the AUD/GBP exchange rate could see significant movement as the Bank of England (BoE) gathers for its latest policy meeting.
There has been considerable speculation in recent months that the BoE may seek to accelerate the pace of monetary tightening this year, with many analysts forecasting that the Bank may be targeting a rate hike in May.
This will likely see a lot attention paid to Thursday’s rate decision, with any hints from the BoE that a rate hike may be imminent likely to prompt the Pound to soar.
Meanwhile Australia will publish its latest jobs report next week, with predictions of another robust rise in employment potentially being offset by anaemic wage growth, possibility leading to a dip in the Australian Dollar exchange rate.