The British pound is flat against the Australian dollar on Monday.
- FX markets take pause after rough week
- EU accepts UK will not extend transition period
- EU/UK high level talks conclude
- The pound-Aussie exchange rate gained +0.54% last week
GBP/AUD was down by 22 pips (-0.11%) to 1.8894 as of 4pm GMT.
The currency pair reached 1.84 in morning trade but reversed all the gains to end flat near Friday’s close of 1.83.
GBP: High level trade talks come and go
Traders had one eye on high level Brexit talks and one eye on the general mood for risk-taking across markets, which have been shaken since last Thursday when stock prices careered lower to bring about the worst weekly declines since March.
The video conference between Boris Johnson and European Council president Charles Michel, European Commission president Ursula von der Leyen and European Parliament president David Sassoli were amicable. No clear breakthrough was apparently made in the negotiating deadlock but there was a promise of fresh momentum during the new talks arranged for July.
European share markets spent most of the day in the red, but initial losses were pared by the afternoon as Wall Street opened. The pick off the lows in US stocks appeared to give new life to the Aussie dollar.
AUD: Pares losses as NY data impresses
It was a light day for economic data, where the Empire manufacturing index was the highlight. Investor sentiment improved after the index impressively bounced back to pre-virus level within 2-months. By June it was only just in negative territory at -0.2, a big improvement from -48.5 last month and well above the -30 expected. In April it was -78.2. Sub-sectors of the index including new orders, shipments, inventories, prices paid and received all going in the right direction.
Beijing announcing a halt to plans of reopening leisure and entertainment venues after a new series of virus clusters emerged in recent days. Added to disappointing China industrial and retail sales data, it was a bad omen for the Aussie and Australia’s economic reliance on China.
