The AUD/GBP currency pair settled above a fresh 112 1/2-month low of 0.4651 and registered its worst weekly performance since late September 2022, after China’s retaliatory move to US tariffs.

China announced on Friday it planned to implement 34% tariffs on all goods imported from the US, with the deadline set for April 10th. The move came as a response to the Trump administration’s 54% duties imposed on Chinese imports.

This fueled concerns over an escalating trade conflict between the world’s first two largest economies and triggered broad risk aversion, mounting pressure on the risk-sensitive Australian Dollar.

Due to Australia’s strong trade ties with both the United States and, particularly, China, the imposition of these tariffs raised concerns about future disruptions to its export sector and overall economic growth.

The Aussie Dollar’s sharp depreciation has prompted a recalibration of expectations regarding the Reserve Bank of Australia’s future monetary policy. Markets have begun to price in a more aggressive easing cycle, expecting that the central bank will need to lower interest rates more substantially to buffer the domestic economy from the potential negative effects of the trade war.

Meanwhile, UK will also face the US’ 10% baseline tariff. As a result, market players have increased their bets on further rate cuts by the Bank of England. Markets are now pricing in about 70 basis points of BoE rate cuts by December.

The AUD/GBP currency pair settled 3.05% lower at 0.4683 on Friday.

The minor Forex pair went down 3.57% for the week.