The British pound is lower against the Australian dollar on Wednesday.
- China dispute with India in focus after 20 Indian soldiers killed
- Rise in Texas hospitalisations hits ‘risky’ currencies
- Optimism over Dexamethasone as COVID-19 treatment
- This week the Sterling-Aussie exchange rate is lower by -0.64%
GBP/AUD was down by 22 pips (-0.11%) to 1.8894 as of 4pm GMT.
1.825 was a midpoint for the currency pair on the day, which ultimately gave way to weakness, ending the day closer to 1.815. Yesterday the exchange rate rose +0.18%.
GBP: Texas hospitalisations spike
There was some alarm across stock markets when Texas announced hospitalisations had risen by 11% since yesterday. The critical concern to the economic recovery had always been a second wave of infections. In the case of the United States, there are different time frames to consider. While cases in New York, New Jersey and California continue to drop, cases in Texas began to rise later and are still rising. Texas is not experiencing a second wave, it just experienced the first wave later.
Geopolitics and rising virus cases aside, investor optimism was to be found in Dexamethasone, a low cost steroid that has been found to significantly reduce the chance of death in severe cases of COVID-19. UK Health Secretary said it will help us “turn the corner against the coronavirus”. This might be overstating it but there are now a series of treatment options available to doctors, unknown at the start of the crisis.
AUD: China conflicts, oil demand forecasts
China’s foreign ministry said that conflict with Indian troops resulted in casualties and maintains that India “is the one that violated the consensus on 15 June”. Blame shifting is taking place but there is no serious escalation in the dialogue that suggests a wider conflict is at foot.
Commodity prices were another consideration for the Aussie as a commodity-currency. The monthly OPEC report said the 2020 demand forecast was steady at -9.1 million barrels per day (mbpd). It noted Q2 demand was down 17.3 mbpd and that OPEC output fell 6.3mbpd in May based on secondary sources.
