A jump in commodity prices including crude oil and gold, which hit a seven year high bolstered the commodity-sensitive Aussie dollar.
Losses in Sterling were limited by a positive tone in markets as investors reacted to the prospect of extra central bank stimulus and more seemingly good coronavirus vaccine trial results.
Pound to Australian dollar was down by 47 pips (-0.26%) to 1.8767 as of 3pm GMT.
After an initial lurch lower, the GBP/AUD moved above and below 1.88 with a tendency to stay below it more pervasive by the afternoon. Last week the exchange rate fell -0.69%.
GBP: Losses limited by vaccine progress
In a sign of persistent weakness, the Sterling-Aussie exchange rate was not able to make any headway despite optimism over a new coronavirus vaccine. A mood to take risk in markets can often be a trigger for strength in the pound.
American biotechnology company Moderna announced some positive data on its early stage coronavirus vaccine on Monday. The company’s share jumped over 10% on the news that all of the 45 participants in its trial produced antibodies after taking two rounds of shots of the vaccine.
Progress appears to being made on various vaccines, which is certainly good news, although the timing of delivery and whether it could prevent a second wave of virus cases remains unknown.
AUD: Aussie supported by rising commodities
Reports that Chinese oil demand is back up to pre-pandemic levels after dropping 20% in March added to recent upside moves in the price of oil. US crude oil topped $30 per barrel after having dived into negative territory just under a month ago.
With Australia a big commodity exporter, the Aussie currency tends to react well to higher commodity prices.
Forecasts for weak economic growth and oversupply during lockdown have sent industrial commodity prices careering lower this year. A surprise draw in US oil stockpiles last week has eased concerns about a lack of storage capacity in the United States for the unneeded oil.