The Australian dollar is still quite depressed following the recent PBOC rate cut and the fall on commodity and equity markets, barely holding on here above the 71 handle against the USD:
As I noted in my post yesterday, Pound Sterling is still firming against the Aussie mainly due to the interest rate differential as the BOE recently raised rates while the RBA remains on hold – and on holidays – until at least early next year. The rapid spread of COVID in the Mother Country however may abate or even invert that key difference and give a weaker cross, particularly if the UK government does announce stricter restrictions.
Another factor is continued (and mad) uncertainty regarding Brexit, with the resignation of Brexit minister David Frost over the weekend adding to the negative sentiment.
The daily chart of the Pound Sterling/Australian dollar cross does show continued positive momentum but there’s a lot of resistance starting to bit at the 1.86 handle with the larger pattern on the weekly chart below showing and inability this year to punch through the 1.90 level:
With local government here extremely reluctant to go into another lockdown, but the UK ready to do so even over Christmas, watch for any inversion in Pound Sterling.