The British pound was lower against the Australian dollar on Wednesday thanks to a shaky recovery in risk appetite alongside the open of trading on Wall Street. Sterling was reacting to comments from EU Chief Negotiator Michel Barnier.
GBP/AUD was down by 12 pips (-0.06%) to 1.967 with a daily price range of 1.965 to 1.978 as of 3pm GMT. The currency pair is stalling beneath multi-year highs near 1.97 but is holding short term support at 0.965.
The Aussie dollar was again tracking overall risk sentiment with global markets honed-in on the latest news about the coronavirus. The Australian currency had been lower on the day but turned higher when Wall Street opened in the black. The modest stock market gains on Wednesday don’t even scratch the surface of the rout that saw the biggest two-day points loss on the Dow Jones Industrial Average ever.
Some high-profile event cancellations including the Italy vs England Six Nations Rugby International Rugby match were a sign that the economic implications of the virus are still expanding. This follows an earlier warning that the outbreak of cases in Japan means the Tokyo Olympics could be cancelled.
GBP down as Shop Price Index fell more than expected
Afternoon comments from the EU’s Chief Brexit Negotiator Barnier were a little more constructive than those given overnight, giving a lift to the pound. Barnier said the EU is ready to offer “super preferential” access to EU markets, a headline that helped Sterling off its lows of the day. However it was tempered by statements that reflect the bloc’s goals shared in yesterday’s negotiating mandate. Specifically that there is “no single template for EU trade deals” and the “UK is not Canada”. He noted that “modern trade deals are about ensuring high standards for social and labour fields” and it “should be no problem for the UK to agree on ground rules.”
On the data front there was a little more disappointment from the UK but the effects on the pound were fleeting. The British Retail consortium (BRC) Shop Price Index, a measure of price changes in popular retail outlets fell -0.6% versus the -0.3% expected.