• The China proxy, the Australian Dollar (AUD) strengthened after profits at industrial firms in China jumped for a second straight month
  • US – Chinese tensions weigh on sentiment amid consulate closeures
  • Pound (GBP) supported by strong UK data at the end of last week
  • Brexit concerns linger dragging on sterling

The Pound Australian Dollar (GBP/AUD) exchange rate is heading lower at the start of the new week, paring 0.2% gains from the previous week. The pair settled on Friday at 1.8007. At 08:15 UUTC, GBP/AUD trades -0.1% at 1.7987.

The Australian Dollar, which is also known as a China proxy is finding support following strong Chinese factory profits data. According to the Chinese statistics bureau, profits at industrial firms in China surged 11.5% in June compared to a year earlier. This was the fastest pace of growth in over a year, adding to evidence that the country’s economic recovery is gathering pace after the coronavirus crisis.

The upbeat data is the second straight month of profits at Chinese factories, after recording a record slump earlier in the year.

Whilst Chinese data supported Aussie Dollar rising US – Chinese political tensions are keeping any gains in check. China closed the US consulate in Chengdu after Trump closed the Chinese consulate in Houston as distrust soars.

Australian domestic data is in short supply at the start of the week, with investors looking ahead to the latest inflation print. Analysts are expecting to see a significant drop of 2%, which would mark the largest decline in inflation since records began in 1947.

The Pound is trading mixed versus its major peers on Monday. Whilst falling coronavirus numbers and upbeat data at the end of last week are supporting sterling, Brexit uncertainties continue to drag on the currency.

UK retail sales surged 13.9% in June well ahead of the 8% expected and adding to a 12% surge in May. UK PMI data for the manufacturing and dominant service sector also surprised to the upside boosting optimism surrounding the UK’s economic recovery.

However, the Pound is still at the mercy of Brexit headlines, which suggest that little to no progress was made in the latest round of Brexit talks. The lack of progress raises the prospect that the UK will leave the transition period in December on unfavourable World Trade Organisation trade rules. is a news site only and not a currency trading platform. is a site operated by TransferWise Inc. ("We", "Us"), a Delaware Corporation. We do not guarantee that the website will operate in an uninterrupted or error-free manner or is free of viruses or other harmful components. The content on our site is provided for general information only and is not intended as an exhaustive treatment of its subject. We expressly disclaim any contractual or fiduciary relationship with you on the basis of the content of our site, any you may not rely thereon for any purpose. You should consult with qualified professionals or specialists before taking, or refraining from, any action on the basis of the content on our site. Although we make reasonable efforts to update the information on our site, we make no representations, warranties or guarantees, whether express or implied, that the content on our site is accurate, complete or up to date, and DISCLAIM ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Some of the content posted on this site has been commissioned by Us, but is the work of independent contractors. These contractors are not employees, workers, agents or partners of TransferWise and they do not hold themselves out as one. The information and content posted by these independent contractors have not been verified or approved by Us. The views expressed by these independent contractors on do not represent our views.