"Global drivers, a weaker USD and better risk sentiment, should remain supportive for the AUD in the near term. However, risks are skewed to weakness, especially after the AUD's recent outperformance" - Barclays.

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The Australian Dollar is underperforming its G10 peers at the start of the new week following the release of disappointing data from China, but it nevertheless looks well supported longer-term against the British Pound.

The Pound to Australian Dollar exchange rate (GBP/AUD) fell to 1.7024 last week in line with AUD outperformance, and in doing so broke to the bottom of the March-August range, perhaps heralding a resumption of a broader trend lower.

The below chart shows a sharp fall in the exchange rate after Russia invaded Ukraine, but this gave way to consolidation as global commodity prices fell back. The most recent breakdown in support could however imply that downtrend is about to restart:

Above: GBP/AUD at daily intervals. (Set your FX rate alert here).

"Global drivers, a weaker USD and better risk sentiment, should remain supportive for the AUD in the near term. However, risks are skewed to weakness, especially after the AUD's recent outperformance," says Lemon Zhang, an analyst at Barclays Bank in Singapore.

The Australian Dollar is under pressure as we reach mid-month with new data out of China hurting sentiment in the region.

It was reported Chinese industrial production grew 3.8% year-on-year in July, underwhelming against the 4.6% expected by markets.

Retail sales meanwhile expanded 2.7% year-on-year, just half of the 5.0% the market was looking for, confirming the impact of China's unrelenting zero-Covid policy remains a burden on domestic activity.

The surveyed jobless rate fell to 5.4% from 5.5%, but the youth unemployment rate hit a record 20%.

In response, the People's Bank of China (PBoC) surprised analysts by cutting both one-year and seven-day lending rates by 10 basis points in response.

"The rate cut came as a surprise but then the slew of weaker-than-expected July data released shortly after the policy action explained the decision as the authorities had apparently been made aware of that," says Frances Cheung, Rates Strategist at OCBC Bank.

China's economy matters greatly for the Australian Dollar as China is Australia's single most important trading partner, accounting for the majority of the country's exports.

Given the Australian Dollar is supported by Australia's impressive Terms of Trade, any slowdown in demand from China could therefore be read negatively.

"The week starts with focus on China's 10bp cut in its one-year Medium-Term Lending Facility (MLF). Rather than rallying on the prospect of stimulus, commodity currencies have softened on the view that China may not be the engine of world growth for some time," says Chris Turner, Global Head of Markets and Regional Head of Research for UK & CEE at ING Bank.

"Occasionally, one might see the commodity currencies rally on news of fresh monetary stimulus. In this instance, however, the Australian dollar is off around 0.5%," he adds.

GBP/AUD remains under pressure long-term but has risen by a third of a percent at the start of the new week to quote at 1.7135, bank accounts are quoting around 1.6655 for Aussie Dollar payments while payment specialists are quoting around 1.7084.

Against the U.S. Dollar the Aussie is three quarters of a percent lower at 0.7063.

The Australian Dollar has nevertheless been appreciating in value against the U.S. Dollar through July and into August, supported by an improved tone to global markets.

This has been partly linked to a trend in improvement in China's economic performance as it reopened from the stringent lockdowns witnessed earlier in the year.

Having virtually flatlined in the second quarter, China’s economic dataflow, especially with respect to trade, has been improving, says Taimur Baig Chief Economist at DBS Bank.

"But there are major lingering headwinds," he adds.

The surprisingly weak data out on August 15 is testament to such headwinds.

"Money supply and loans are picking up, which ought to support production and investment sentiment. We continue to expect a little more than 4% growth this year, but would not be surprised if another round of downgrade is warranted later," says Baig.