The British pound is higher against the Australian dollar on Tuesday.
- A jump to record high gold prices (and swift drop) spills into FX
- UK CBI survey data tops expectations
- Fitch reaffirms China A+ credit rating
- Federal Reserve interest rate decision tomorrow
GBP/AUD was up by 61 pips (+0.34%) to 1.8076 as of 4pm GMT. The pound-Australian dollar exchange rate is higher by +0.41% this week.
The currency pair finished the day near the top of a 100-pip price range between 1.798 and 1.808. Yesterday it gained by a small +0.06%.
GBP: Pound gains as precious metals seesaw
The British pound performed well in FX markets on a day that saw huge price volatility in precious metals markets. Having topped $25 per oz for the first time in 11-months, silver tanked 9% before recouping a large chunk of the losses through the day. The price of gold struck a record high before turning lower, then rebounding back into positive territory for the day.
Sterling was on course for its 4th daily gain over the Aussie on Tuesday – with today’s specific trigger being the better UK economic data from the Confederation of British Industry (CBI).
July CBI retail data handily topped expectations at +4 instead of the -25 expected. The results are a positive sign that the re-opening of the economy is prompting better feeling in business about the return to a more normal level of economic activity.
AUD: Fitch reaffirms China rating.
The Australian dollar has historically had a strong correlation with the price of gold, but it has broken down ever since the trade war escalated between the US and China last year.
There was good news for Australia’s strongest trading partner China- unfortunately tense political relations limited any positive effect on the Aussie currency.
Fitch, the US ratings agency has predicted China will grow by +2.7% this year, less than half its 2019 level of growth- but any growth is positive under current circumstances. The agency noted the country’s ability to enforce ‘quite draconian lockdown measures’ if needed.
The currency that can best weather the Fed rate decision tomorrow should fare best over the near term.