GBP/AUD is declining on Monday, trying to break below a support line that worked on Friday. Currently, the pair is trading at 1.9367, down 0.22% as of 6:50 AM UTC.
After breaking above the top line of a symmetrical triangle, the price rallied on Thursday.
GBP/AUD: AUD supported by PBOC’s decision to provide medium-term loans to financial institutions
Now the Aussie is trying to recover those losses. AUD is supported by the People’s Bank of China’s (PBOC) decision to provide 200 billion yuan of one-year medium-term lending facility (MLF) loans to financial institutions in an attempt to boost an economy that struggles with the coronavirus consequences. The rate of those loans was cut by 10 basis points to 3.15%, which is the lowest in three years. Now markets anticipate the PBOC to cut the loan prime rate (LPR) later this week.
Note that China is Australia’s largest trade partner, which is why the Aussie reacts promptly to any news and event that has an impact on the Chinese economy.
Despite the temporary relief for the Australian dollar, the currency is still under pressure amid the coronavirus epidemic. The global death toll has reached 1,770, with over 70,000 being infected by the new virus named COVID-19.
Australia announced that it would evacuate over 200 of its citizens onboard a cruise ship that has been quarantined since arriving in Yohohama, Japan at the beginning of this month. Prime Minister Scott Morrison said earlier today that the passengers would leave the ship on Wednesday and will be quarantined at home for another 14 days.
As for the Pound sterling, it still struggles with post-Brexit pessimism, as the UK and the European Union are set to start trade negotiations next week. Yesterday, French foreign minister Jean-Yves Le Drian warned that the two sides would “rip each other apart” during the trade talks. What’s worrying for investors, he said that the UK would find it difficult to reach a free trade deal by the end of December.
Le Drian said during a security conference in Munich:
“I think that on trade issues and the mechanism for future relations, which we are going to start on, we are going to rip each other apart. But that is part of negotiations, everyone will defend their own interests.”