- Australian Dollar (AUD) is dragged lower by a broad risk off mood in the market, as covid numbers grow in US and Australia
- Vaccine news and the minutes from the latest RBA monetary policy meeting are awaited
- Pound (GBP) broadly under pressure as UK – China relations deteriorate
- Brexit talks restart but expectations of a breakthrough are low
After falling over 1% across the previous week, the Pound Australian Dollar (GBP/AUD) exchange rate is edging higher at the start of the new week. The pair settled on Friday at 1.7960.
At 08:15 UTC, GBP/AUD trades +0.1% at 1.7990, this is at the top end of the daily traded range.
The risk sensitive Australian Dollar is under pressure amid a broad risk off mood in the market. Concerns over rising coronavirus numbers are dragging on sentiment as investors await news on further stimulus from the US and Europe and on vaccine developments.
In Australia the second wave covid outbreak is proving to be almost harder to contain that the first. The state of Victoria, Australia’s second most populous state announced 217 new coronavirus cases even as Melbourne continues in lockdown.
Vaccine news could provide support to the risk sensitive Aussie Dollar. Today, Oxford University and AstraZeneca are expected to report an update on the Phase 3 trials for their joint vaccine candidate. An encouraging report could boost risk sentiment and lift the Australian Dollar.
There are no high impacting Australian data releases today. Investors will look ahead to the release of the minutes from the Reserve Bank of Australia’s monetary policy meeting on Tuesday.
The Pound is trading mixed versus its peers as it attempts a recovery after selling off in early trade. Worsening UK – China relations and Brexit nerves will keep any move higher in the Pound capped.
Foreign Secretary Dominic Raab is expected to announce, later today, that the UK will suspend an extradition treaty with Hong Kong, a move which will anger Hong Kong and most likely prompt further escalation in tensions between the UK and China. Dominic Raab is due to set out the Government’s latest response to China imposing a national security law on Hong Kong, the former British colony. Rising tensions and fears that the UK is sliding towards a cold war with China is dragging on the Pound.
Brexit talks are due to restart after several rounds of deadlock. Expectations for a break through are low.
