GBP/AUD continues to recover the losses of a bearish trend last week, though at a very slow pace. The pair is now trading at 1.8889, up 0.04% as of 6:40. The quotation has been fluctuating in a sideways trend since yesterday morning, trying to break a strong resistance level.
The pound got a modest boost from positive housing market data. Earlier today, the Royal Institution of Chartered Surveyors (RICS) said that its monthly house price balance had surged to -2 last month, from -11 in November, to the highest level since June. Both agreed homes sales and expectations of future sales jumped in December, suggesting that the Brexit uncertainty eased after Prime Minister Boris Johnson secured a historic win in the election.
RICS Chief Economist Simon Rubinsohn stated:
“Whether the improvement in sentiment can be sustained remains to be seen given that there is so much work to be done over the course of this year in determining the nature of the eventual Brexit deal.”
The optimism expressed by the RICS survey coincides with other signs of an increase in confidence among businesses and consumers.
However, much depends on Brexit tensions. While the UK is about to leave the European bloc on January 31, the next major milestone is the transition period during which the two sides have to reach a trade deal. European leaders call for at least two years of negotiations, but Johnson made it illegal for the UK government to extend the transition period beyond December 2020, which raised concerns over a potential no-deal Brexit.
If the economy continues to remain weak, several Bank of England policymakers, including Governor Mark Carney, said recently that they would support an interest rate cut.
Elsewhere, Australia continues to measure the extent of damages caused by one of the worst fire seasons in its history. Leaders of the country’s tourism industry said that the sector had lost about A$1 billion, and called for help from the government.
Industry executives will meet with Tourism Minister Simon Birmingham later today as rains brought some relief after several months of intense bushfires.
