GBP/AUD is flat in early trading on Tuesday, though it is gradually retracing from yesterday’s peak. The pair is currently trading at 1.9017, showing no change as of 5:52 AM.
On Monday, the pound surged against the Aussie driven by increased Brexit optimism after UK Prime Minister Boris Johnson launched his election manifesto and promised to put his Brexit deal to the vote in Parliament by Christmas.
Elsewhere, UK retailers noted better-than-expected sales figures in November and are optimistic about December, which includes the Christmas season. The Confederation of British Industry (CBI) said that its index of reported sales increased to -3 from -10 in October, beating analysts’ forecasts. The survey also showed that more retailers have high expectations for next month, with a positive net balance of +21 among retailers expressing confidence, compared to +1 in October, which is the highest figure in six months.
CBI economist Anna Leach commented:
“Retailers are entering the festive season with a bit of hope that sales will head up, with the strongest expectations in half a year.”
This combination of positive news pushed the sterling, which gained 0.57% against the Australian dollar, the biggest daily gain since November 14.
However, the pair turned slightly bearish right after yesterday’s daily peak, suggesting that bulls are having a rest.
The Aussie is backed by increased hopes of a “phase one” trade deal between the US and China. According to China’s Commerce Ministry, top trade negotiators from both sides held a phone call a few hours ago in what seems to be an attempt to secure a preliminary deal.
Thus, US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin spoke with Chinese Vice Premier Liu He. The ministry said that they discussed the phase one agreement issues and reached “a common understanding on resolving relevant problems.”
Markets have hoped that the phase one deal would be signed by the end of the year, but people close to the White House hinted that it might be delayed to the new year, as China is pushing for extensive tariff rollbacks.