The British pound (GBP) is lower against the Australian dollar (AUD) on Monday.
- Trump refrains from direct China sanctions
- China cuts US agricultural purchases- sources
- Post-Brexit EU/UK talks resume tomorrow
- Remdesivir helps ‘some patients’ in late stage coronavirus trial
GBP/AUD was down by 119 pips (-0.65%) to 1.8381 as of 4pm GMT.
The currency pair gave up the 0.85 level early on a quickly slumped below 1.835 before stabilising and drifting back to around 1.84. Last week the exchange rate dropped -0.72% for a fifth weekly decline.
GBP: Brexit concerns and manufacturing begins recovery
Brexit is front-of-mind again as negotiators meet tomorrow for the last opportunity to make progress before the June EU summit, which will be attended by UK Prime Minister Boris Johnson. The war of words from the last two weekly sessions suggest another stalemate.
Outside of Brexit, UK manufacturing remains in deep contraction. The UK Final May manufacturing PMI was 40.7, up slightly from the preliminary estimate of 40.6.
Commenting on the data, Markit cautioned “…Changes to working practices, uncertainty about how long the COVID-19 restrictions may be in place for, weak demand and Brexit worries all suggest the UK is set for a drawn-out economic recovery.”
AUD: China tensions simmer but don’t explode
Markets that are sensitive to China, including the Australian dollar and Hong Kong shares were higher amid a state of relief that US President Donald Trump didn’t go further in his actions against Hong Kong, announced in his press briefing on Friday.
While Trump and his administration took the extraordinary step of stripping Hong Kong of its ‘Special Status’, he didn’t add new sanctions directly against China for its new security law.
The US dollar came under pressure after protests erupted across the United States over the weekend. In addition, the need for a haven was reduced amid new progress in trials of Gilead Science’s Remdesivir as a treatment for the coronavirus. The losses in the dollar fuelled strength in AUD/USD which crossed its 200-day moving average, a popular technical indicator followed by traders.
