- British Pound (GBP) edges lower as Cummings scandal overshadows Brexit breakthrough
- Australian Dollar (AUD) rallies despite worsening US – China relations
- Chinese factory profit falls lessen in April -4.3% vs -35% in March
- At 09:15, GBP/AUD is trading -0.2% at 1.8500 >> Real time exchange rate
The Australian Dollar is continuing its risk rally, bounding higher versus the Pound for a third consecutive session, despite cooling US – Sino relations.
The Aussie Dollar settled on Tuesday +0.45% at 1.8540 as vaccine hopes and economic recovery optimism overshadowed trouble brewing in Hong Kong.
Today, at 09:15 UTC, GBP/AUD is trading at -0.2% at 1.8500, just shy of the 7-month low of 1.8484 reached overnight.
The Pound is trading mixed versus its major peers. On the one hand sterling is supported by Brexit trade developments on the other, the Cummings scandal is dragging on demand for sterling.
Recent reports indicate that Michel Barnier Chief EU negotiator is willing to adopt a softer stance on unchanged access to UK fishing area. This had been a sticking point in EU -UK trade deal negotiations. Investors are hoping that the move by the EU could open the door to further concessions from both sides, increasing the chances of a trade deal being reached.
With no high impacting UK economic data due to be released, the Cummings scandal threatens to overshadow Brexit optimism. Prime Minister Boris Johnson is struggling to draw a line under the scandal which saw his top aide break lockdown rules. Boris Johnson will face questions on the topic today.
The Aussie Dollar continues to rise despite intensifying tensions between US and China over China’s attempts to restrict liberties in the financial hub.
Instead Australian Dollar investors are cheering signs of recovery in the Chinese economy. The Aussie Dollar is considered to be a liquid proxy for China.
Data revealed that Chinese factory profits fell at a much slower rate in April, as the economy recovers. Profits fell -4.3% in April compared with a year earlier, a strong rebound from the -35% drop in March as the Chinese economy recovers from the coronavirus slump.
Whilst this is certainly a step in the right direction, the economic recovery is expected to be slow as external demand will be slow to pick up.
