Pound Struggles Against Dollar Even as China Considers Slowing Purchase of US Bonds

The British pound is lower against the Australian dollar on Tuesday.

The highest ever rise in UK jobless claims as well as plans for £30 billion in tariff reductions after Brexit weighed on Sterling.

China escalating its rift with Australia by announcing an 80% tariff on Australian Barley meant the Aussie was under some pressure too.

Pound versus Australian dollar was down by 18 pips (-0.09%) to 1.8670 as of 4pm GMT.

GBP/AUD saw minimal movement with the price clinging onto the 1.87 level. The exchange rate tumbled 0.87% yesterday leaving it down over 1% for the week.

GBP: Record jobless claims hit Sterling

Britain has a long recorded history but nothing comes close to the employment numbers reported today in available historical data. Jobless claims surged by 856,000 in April.

The pound was mostly able to shake off the horrific numbers because the same is happening everywhere and because it is hoped many people will return to their jobs once the lockdown has ended.

Outside of the jobless data, the UK announced a planned £30 billion in tariff cuts from January 1, 2021 after the Brexit transition period. UK politicians would clearly prefer to switch the narrative to something more positive after last week’s EU trade negotiations stalemate.

AUD: New China tariffs an ongoing risk

RBA minutes were released but with little new information about a meeting in which no change to policy was made, it was Australia’s spat with China that was a bigger mover of the currency.

China is reacting to Australia leading the calls for an investigation into the origin of the coronavirus with economic force. An 80% tariff on Australian Barley announced on May 10 and was confirmed today.

China is reportedly looking at wine, seafood, oatmeal, fruit and dairy as other target industries for tariffs or other measures including implementing stricter quality checks, anti-dumping probes or encouraging consumer boycotts via state media.

So far the potential escalation in tensions with China has not been reflected in the Australian dollar with GBP/AUD at multi-month lows and AUD/USD near 6-week highs.

Currencylive.com is a news site only and not a currency trading platform.
Currencylive.com is a site operated by TransferWise Inc. ("We", "Us"), a Delaware Corporation. We do not guarantee that the website will operate in an uninterrupted or error-free manner or is free of viruses or other harmful components. The content on our site is provided for general information only and is not intended as an exhaustive treatment of its subject. We expressly disclaim any contractual or fiduciary relationship with you on the basis of the content of our site, any you may not rely thereon for any purpose. You should consult with qualified professionals or specialists before taking, or refraining from, any action on the basis of the content on our site. Although we make reasonable efforts to update the information on our site, we make no representations, warranties or guarantees, whether express or implied, that the content on our site is accurate, complete or up to date, and DISCLAIM ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Some of the content posted on this site has been commissioned by Us, but is the work of independent contractors. These contractors are not employees, workers, agents or partners of TransferWise and they do not hold themselves out as one. The information and content posted by these independent contractors have not been verified or approved by Us. The views expressed by these independent contractors on currencylive.com do not represent our views.