GBP/AUD: Pound Still Under Pressure on No-Deal Brexit Fears

GBP/AUD is slightly increasing in early trading on Tuesday, but the chances are that the pair will end the session in red. Currently, one British pound buys 1.8687 Australian dollars, up 0.06% as of 6:35 AM UTC. Yesterday, the price declined by 0.76%, updating the December low.

On Christmas Eve, markets in Australia closed earlier. Markets in the UK will close at 12:00 PM local time. There are no suggestive fundamentals at the moment that could drive the quotation in one direction or another, so investors are regurgitating last week events.

Volumes are weakening, and bears need less capacity to put pressure on the pound.

The slight increase seems to be temporary, as the pair is heading towards the lowest level since mid-October. The sterling thrived after the election results showed that UK Prime Minister Boris Johnson’s Conservative Party won a historic victory. However, sentiment made a u-turn after the PM said he would exclude any attempt of extending the Brexit transition period, which is currently set for December 2020.

Last Friday, the UK Parliament passed the second reading of the Withdrawal Agreement Bill (WAB), which was amended to make any extension of the transition illegal. Investors fear that the tight timeline for the transition might lead to a no-deal Brexit, which is expected to have negative effects on the economy.

Since the lawmakers voted 358 to 234 to pass the WAB, the UK is about to exit the bloc by January 31 of next year. Johnson said before the vote:

“This is the time when we move on and discard the old labels of ‘leave’ and ‘remain’ … now is the time to act together as one reinvigorated nation, one United Kingdom. Now is the moment to come together and write a new and exciting chapter in our national story, to forge a new partnership with our European friends, to stand tall in the world, to begin the healing for which the whole people of this country yearn.”

Jeremy Corbyn, leader of the opposition Labour Party, said the deal was “terrible” and his party would not support it.

Elsewhere, the Aussie is supported by increasing optimism over the US-China trade deal.

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