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FOREX: Westpac note that "A$ resilience in recent weeks despite a more mixed
global risk mood suggests underlying optimism over Australia's post-pandemic
recovery compared to the UK. The resurgence of Covid-19 cases in Victoria is
obviously a concern but A$ price action suggests it is not regarded as a
game-changer. The consensus forecast is for Australian GDP to contract -4% over
2020, versus -8.5% in the UK. Both the RBA and BoE are pursuing very
expansionary monetary policy (BoE somewhat looser) and fiscal support is
substantial. In Q2, Australia's fiscal boost was larger than the UK's but the UK
is planning fresh support as Australia looks to trim its spending. Australia's
C/A position (surplus) is much more supportive than the UK's (deficit), helping
AUD against GBP. Brexit negotiations remain a wildcard in coming weeks, with
optimism growing. Near term, the Aussie looks quite stretched and is pricing in
quite an upbeat equity outlook. AUD is likely to keep underperforming on any
significant equity pullbacks, which could see the cross extend as far as AUD/GBP
0.5400/20 or GBP/AUD 1.8450/1.8520. These would be attractive levels to buy the
Aussie on a multi-week/month outlook."