The British pound is lower against the Australian dollar on Tuesday.
The reopening of the global economy is going according to plan and a new coronavirus vaccine is undergoing trials. The result is that investors have the confidence to buy currencies that tend to rise in a growing economy, like the Aussie dollar.
Sterling fell against the Aussie currency but versus other currencies it was carried higher by the same optimism that took US stock markets to the highest levels since early March.
GBP/AUD was down by 49 pips (-0.26%) to 1.8560 as of 4pm GMT.
The currency pair is sitting just above 7-month lows, trading in a sideways range between 1.85 and 1.86. Yesterday the exchange rate was flat at -0.01% leaving it down on the week.
GBP: Sterling trading heavily near 7-month lows
Government plans to open British shops, department stores and shopping centres on June 15 if certain requirements are met was welcome news for the UK economy and for the pound. If the UK economic reopening can catch up with other European states, it potentially removes some of the virus-risks that has put off Sterling buyers.
A calm and collected performance from Prime Minister Boris Johnson’s political aide Dominic Cummings in a press conference last night probably means he keeps his job after making a long car trip during lockdown. That on balance, increases the chance the government maintains its plan to walk away from post-Brexit EU trade talks in June if insufficient progress is made, adding some downside economic risk to the pound.
AUD: Vaccine and lifting lockdowns a boost
The Sterling-Aussie exchange rate continues to press into the 7-month lows reached last week with investors differentiating between the two country’s progress against the coronavirus and the effect that is having on monetary policy.
Australian States lifting lockdown measures and Novavax making progress towards another coronavirus vaccine means growth-friendly currencies like the Aussie stand to outperform while havens like the dollar are backing off. Australia opened schools this week and if all goes to plan, aims to reopen bars and restaurants in June.