Westpac note that "A$ resilience in recent....>

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."