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GBP AUD Mixed After Boris Johnson Resigns

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The GBP AUD exchange rate recovered earlier losses to post a slight gain after UK Prime Minister Boris Johnson announced his resignation. Johnson tried to cling to the post but stepped down after meeting Sir Graham Brady. The pound will benefit from the end of a messy few months for the British leader. In Australia, stronger trade balance figures lifted the dollar, driven by higher coal exports. 

The GBP to AUD rate trades at 1.1760 and pauses to absorb the impact of a new Prime Minister. 

Upbeat trade balance figures boost the Aussie dollar 

The latest trade data from the Australian Bureau of Statistics showed a stronger trade balance. 

Analysts initially expected a A$10,275m figure, but the actual result was A$15,965m. Goods and services exports were up 9.5%, while imports were up 5.8% month-on-month. 

The export increase is primarily due to coal and higher gas market prices. No further data was released this week for the pound sterling or Australian dollar, and the current trend of Aussie strength should hold.  

In the UK, Prime Minister Boris Johnson clung to his job despite 40 ministers and aides resigning in 24 hours. The uncertainty will keep the pressure on the pound sterling over the weekend as investors consider the outcome. Johnson and his new Chancellor were due to set out the country’s financial plan, but that may not hold much weight with leadership challenges. 

Chinese investors dump Australia as a critical destination 

Chinese investors are pulling out of Australia due to its tense relationship with the country. A report by KPMG said that Chinese investment in Australia had dropped 70% since 2007 

Chinese firms spent A$778 million, compared to only $2.5 billion in 2020. Only four deals accounted for a large portion of those investment flows. 

“The decline really has now gone to a level where there is literally none or very little investment coming from China,” Hans Hendrischke, author and professor in Chinese business and management from the University of Sydney, said. 

However, Dr Wey Li at the University of Sydney said that companies are still holding previous investments. He asserted that he did not see a major trend of Chinese companies withdrawing their investment in Australia, presently. It’s a case of ‘wait and see.’ While investment was resource-intensive, with countries like Australia seeking access to iron ore and coal, it moved away from these investments to technology. 

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The post GBP AUD Mixed After Boris Johnson Resigns appeared first on Pound Sterling Forecast.


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