GBP/AUD is not satisfied with the impressive Thursday rally and continues to update the year-to-date peak. Currently, the pair is trading at 1.9512, up 0.89% as of 5:55 AM UTC. The price has gained over 2.7% since Thursday low at 1.8980.
The sterling is driven by increased Brexit optimism after a major victory of the Conservative Party in the UK election held on December 12.
After securing a historic win, UK Prime Minister Boris Johnson reiterated that he would “get Brexit done” by January 31 and then reach a new trade deal with the European Union by the end of next year.
He told Sky News:
“I can absolutely confirm that we will have an opportunity to vote on the Withdrawal Agreement Bill in relatively short order and then we will make sure that it passes before January 31st.”
Besides the Brexit process, Johnson should achieve another top priority, which is to boost funding into the public health service.
The Conservative-led government is expected to put the Withdrawal Agreement Bill (WAB) back to the vote in Parliament before Christmas, ministers said. After realizing Brexit in about a month or so, Johnson will have to secure a trade deal with the EU.
However, EU’s chief negotiator Michel Barnier said last month that he wouldn’t expect the trade talks to be concluded swiftly. Instead, the discussions might be difficult and demanding. He warned the UK government that the EU wouldn’t “tolerate unfair competitive advantage.”
While the pound continues to thrive, the Aussie is under pressure as the Australian government downgraded its economic outlook. The AUD couldn’t face the pressure despite the positive news related to the US-China trade deal and China’s better-than-expected industrial production.
Australia cut its outlook for economic growth and wages as part of a downgrade in expected revenues by A$33 billion over the next four years. The economy is dragged down by slower wage growth and weak consumer spending.
Diana Mousina, an economist at AMP, commented:
“We think that the pressure will remain on the government to provide more support for households as the weak consumer environment drags into 2020. So there is still scope for tax cuts in the May 2020 budget.”
She expects the central bank to cut the interest rate to 0.25% in March.