Pound To Australian Dollar Forecast: GBP/AUD Exchange Rate To Rise If US-China Trade War Escalates

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GBP/AUD Exchange Rate as UK Markets Await Verdict of EU Vaccine SummitThe Pound Sterling to Australian Dollar exchange rate held steady today with the pairing currently fluctuating around AU$1.80.Pound Sterling investors were relieved this morning to see EU leaders push back against the bloc’s plans to ban exports of crucial Covid-19 vaccines to the UK.German chancellor, Angela Merkel, instead put emphasis on the need of increasing European vaccine production, saying:‘The problem at the moment with the vaccine supply isn’t so much due to the question how much was ordered, but more about how much can be manufactured on European soil.‘British manufacturing plants manufacture for Great Britain, the US aren’t exporting anything, and therefore we rely on what can be produced in Europe and we have to expect this virus will preoccupy us for a long time.’However, if EU leaders do decide to ban exports of critical vaccines to the UK during today’s summit, then we would see the Pound Australian Dollar suffer.Daily cases of Covid-19 in the UK are down -153 against last week, but generally, cases of the virus have stabilised. Those hospitalised because of the virus, however, have fallen by -1,786 against last week’s figure.As a result, UK markets remain reasonably confident that the UK will successfully reopen in April and speed up the nation’s ability to recover from the pandemic.Australian Dollar (AUD) Exchange Rates Steady as Risk-Off Mood Limits Demand for ‘Aussie’The Australian Dollar (AUD) has been undermined by risk-off mood today as tensions between the US and China have escalated after a ballistic missile test by North Korea.With China being Australia’s largest trading partner, this has sparked concerns that US-China trade tensions could remerge, limiting Australia’s economic recovery from the Covid-19 pandemic.Today also saw the news that Australia’s economy has become more reliant on iron ore than ever before, meaning that the nation’s economy base has become very narrow.As a result, AUD investors are becoming more cautious about the outlook for Australia’s economy, which has been particularly ravaged by the coronavirus pandemic.John Edwards, an analyst at Financial Review, was more confident about the Australian economy, commenting:‘The economic wreckage caused by coronavirus was abrupt, frightening and savage. It was also short and unexpectedly shallow. It was a deliberate recession brought about by government and by people’s fear of infection. All up, and notwithstanding that Australia was often reported to be in “lockdown”, most of the Australian workforce kept working, either from their usual place of work or from home. Compared with the countries to which it usually compared itself, Australia had a good pandemic.’Australian Dollar (AUD) investors, however, are remaining cautious as US-China trade tensions look like they will be taking a turn for the worse.GBP/AUD Outlook: Could Deteriorating US-China Relations Further Weaken AUD?Pound (GBP) traders will be looking ahead to tomorrow’s release of the latest UK Retail Sales report for February.Any improvement in retail sales last month could drive up the Pound Australian Dollar exchange rate.UK markets will, however, continue to monitor UK-EU vaccine developments.If the EU finally decides to ban exports of the crucial AstraZeneca vaccine to the UK, then Sterling would suffer as the Government’s vaccine rollout programme is challenged by a limited supply of vaccines.The Pound Australian Dollar (GBP/AUD) exchange rate could also rise if risk-sentiment continues to sour as relations between the US and China deteriorate.

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