The British pound is lower against the Australian dollar on Friday.
- China will accelerate purchase of US agricultural goods
- UK government borrowing now 100% of GDP
- May UK retail sales rebound
- British Pound-Australian dollar exchange rate -1.19% this week
GBP/AUD was down by 70 pips (-0.39%) to 1.8055 as of 4pm GMT.
Having held steady at 1.815 in early trade, the currency pair subsequently dropped to 1.795 before rebounding to 1.80. It dropped 0.58% yesterday.
GBP: Sixth weekly decline out of seven
The pound dropped for the sixth week in seven versus the Aussie to its lowest levels sine September 2019. Investors are looking beyond current economic data, which is showing some improvement in the UK on a bounce back after lockdown restrictions were eased.
UK retail sales for May surprised on the topside, rising +12.0% instead of the +6.3% expected. On an annual basis, excluding auto sales and fuel, retail sales are down -9.8% on a year-over-year basis.
Offsetting the retail data was a reminder about the difficult financial position the UK is in. UK May public sector net borrowing was £54.5 billion, above the £49.3 billion expected. Government borrowing reached over 100% of UK GDP for the first time since the 1960s.
New coronavirus cases in the United States remains a concern for global markets. Specific to the pound, UK virus cases have remained stubbornly high around current daily increases and today rose to 1346 from 1218 yesterday.
AUD: US-China phase one deal back on track
Reports that China will accelerate its purchases of US farm goods were an impetus for higher stock markets – and a stronger Aussie dollar on Friday. The decision comes after talks held between the US and China officials in Hawaii this week.
The better news on US-China trade relations helped set aside some of the concern of the rising US coronavirus cases this week. Arizona, which is quickly becoming a new hotspot for new inflections said the number of cases has risen by 3246, 29% higher than the gain of 2519 yesterday.
