The British pound is lower against the Australian dollar on Tuesday.
The relief in selling pressure enjoyed by the pound this week has proved fleeting with another sharp drop to new multi-month lows.
Improved risk appetite and a drop in the US dollar after inflation data bolstered the Aussie.
Pound to Australian dollar was down by 92 pips (+0.03%) to 1.8906 as of 3pm GMT.
GBP/AUD had been as high at 1.91 at one point in the day but slumped 200 pips to fall below 1.89 for the first time since mid-January. Yesterday the exchange rate rose just +0.04% so with today’s losses it is down -0.52% on the week.
GBP: Pound to new 3-month low
While the pound will often gain alongside stock markets, the uncertainty surrounding the UK response to virus and post Brexit trade talks are holding the currency back this week. There will be no update from either side until Friday but inventors are starting to increase bets that there will not have been sufficient progress by June, when the UK has said it would walk away rather than extending the transition period beyond December.
There was at least some positive news from UK finance minister Rishi Sunak that theUK will extend is furlough scheme offering 80% of people’s salary up to £2500 until October.
AUD: Aussie benefits from USD weakness
The declines in the pound-Aussie exchange rate really took hold in the afternoon when a drop in US inflation data as well as a number of Fed speakers spurred hopes of more monetary stimulus in the United States, which pushed down the US dollar.
The Aussie jumped alongside Wall Street as investors set aside concerns that a rise in the number of new coronavirus cases in South Korea and Germany was the beginning of a second wave.
US inflation fell -0.8% in the last month, led by a 20% crash in petrol prices, meaning annual consumer price inflation (CPI) now stands at 0.3%, down from 1.5% in March. The situation was even worse when you strip out petrol to ‘core’ prices which recorded the largest monthly decline on record and the first back-to-back monthly decline in 37 years.
