The British pound is higher against the Australian dollar on Monday.
- AstraZeneca / Oxford COVID-19 trials show good response
- Optimism picks up as US earnings season gets underway
- China leaves 1 and 5-year loan prime rates steady
- Australia extends loan scheme for business
GBP/AUD was up by 84 pips (+0.46%) to 1.8054 as of 4pm GMT. Last week the Sterling-Aussie dollar exchange rate shed -1.11%.
The currency pair found early support near 1.795 and eventually picked up towards 1.805. On Friday it had reversed early losses to close near flat at -0.06%.
GBP: Markets boosted by vaccine trials
The British pound got a lift up alongside UK and European stock markets following good vaccine news from both the UK and Germany, and ahead of several big company updates including Tesla and Microsoft.
The Oxford / AstraZeneca vaccine ‘shows good antibody, T-cell response’ according to a scientific paper written in the Lancet. The trials were of 500 & 1000 people and the company is now conducting late stage II and III trials in UK, Brazil and South Africa.
In Germany, pharmaceutical companies Pfizer and BionTech announced positive vaccine study results for their German phase I and phase II studies.
AUD: China keeps LPR steady
China, Australia’s biggest trade partner left its benchmark interest rates on hold. The 1-year Loan-Prime-Rate (LPR) remains as 3.85%, while the 5-year LPR is still 4.65%. Although the central bank is leaning dovish and has cut other rates in the last couple of months, the lack of extra monetary stimulus in China is a headwind for Australia.
The extra stimulus was thought not to be needed at this stage after official statistics showed China’s economy return to growth in the second quarter after a rare contraction in Q1 at the height of the pandemic.
Inside Australia, more fiscal support was announced over the weekend, and finance minister Josh Frydenberg gave more colour on Monday. Australian businesses will now be able to take out government-supported 5-year loans of up to $1 million from banks. The measures were thought to be necessary after the second wave of new cases that has hit the city of Melbourne and the state of Victoria.
