The GBP to AUD pair started the first trading day of the week on a positive note rallying from a 2 month low. At the interbank market, in early trading on Tuesday, one British pound buys 1.9106 Australian dollars, up 0.72% as of 10:10 AM UTC.
On Monday, the GBP/AUD exchange rate staged a rally that sent the pair up by 0.67% settling at 1.8970.
Moving forward, Sterling will be dominated by the newly elected UK parliament which needs to ratify UK PM Boris Johnson’s Brexit bill before the official deadline 31 January. The Conservative Party has secured a comfortable majority in the UK parliament, which indicates the divorce bill to pass with ease.
From the other side of the monetary policy spectrum, there are no major risk events scheduled on the docket until Thursday when the Trade Balance figures will hit the market. Last year Australia reported its largest trade surplus on record mainly driven by exports, which hit an all-time high. As per the latest data released by the Australian Department of Foreign Affairs, Australia’s trade balance stood at $4,502 million.
The Aussie also lost some ground against the Pound yesterday as the UK purchasing managers’ index for services escaped contraction and rose to 50.0 in December compared to 49.0 prior reading.
Elsewhere, the price of gold touched levels not seen since 2013 amid geopolitical tensions that pushed the safe-haven bids into the precious metal. Australia is the world’s second-largest producer of gold, which means that there is a strong correlation between the prices of the two instruments.
The domestic benchmark equity index in Australia S&P/ASX 200 settled up 1.35% at 6,826.44 compared to the 6,735.71 prior closing rate. At the same time, the Australian 10-year government bond yield closed down -0.98% at 1.208 on Tuesday compared with its previous close of 1.220.
The GBP/AUD technical pattern has successfully broke above the big psychological number 1.9000 and as long as we trade above the big round number on a daily closing basis, the bullish momentum should prevail.