The British pound is lower against the Australian dollar on Tuesday.
- Aussie dollar breaks out above 0.70 to the dollar to 1-year high.
- China’s Xi Jinping ‘will strive to achieve good results for economic growth’
- Risk-on move in FX markets led by Euro after recovery fund agreement
- US begins talks on next coronavirus support package
GBP/AUD was down by 150 pips (-0.83%) to 1.7897 as of 4pm GMT. The pound-Aussie dollar exchange rate is down -0.35% this week.
The currency pair dropped to a new monthly low, challenging the 1.79 level reached in late June and early July. Yesterday it had gained +0.52%.
GBP: Pound hits 3-week low to Aussie
Although higher over the dollar and the euro, the pound failed to hold up against the Aussie dollar, crashing back down to 3-week lows. The Aussie finally broke substantially over 0.70 to the dollar (AUD/USD) following the RBA meeting minutes and a speech from RBA Governor Lowe.
Optimism about new rounds of government stimulus propelled growth-friendly currencies like the Aussie dollar and the British pound higher on Tuesday. EU leaders finally agreed on a €750 billion rescue package and now lawmakers have returned to Capitol Hill to negotiate a new US fiscal stimulus package.
The UK announced its own mini fiscal boost this month. Data today showed borrowing came down slightly in the June but can be expected to spike again when the new spending is factored into the July data.
AUD: Aussie breaks out
Chinese President Xi Jinping did not offer any specifics on Chinese stimulus but made overtures towards more spending and lose monetary policy saying China will strive to make up economic losses caused by coronavirus pandemic, strive to achieve good results for economic growth this year, will make fiscal policy more proactive, prudent monetary policy more flexible and will continue to cut taxes and fees.
RBA minutes and comments from RBA Governor Lowe were nothing new but just hawkish enough alongside the general optimism in markets to help the Aussie breakout from a 6-week consolidation over the dollar and regain momentum over the pound.