GBP/AUD continues its bearish stance in early trading on Tuesday, though at a moderate pace. Yesterday, the pair tried to bounce back after touching a strong support level at 1.8775, which will likely be tested again later today. Currently, one British pound buys 1.8799 Australian dollars, down 0.06% as of 6:30 AM UTC.
The sterling has been under pressure as the Bank of England (BoE) is ready to cut the interest rate for the first time since 2016. Several BoE policymakers, including Governor Mark Carney, said that they would back a rate cut if the economy didn’t show signs of improvement. Yesterday, the Office for National Statistics (ONS) reported that the gross domestic product (GDP) declined by 0.3% in November, while analysts expected no change. The economic slowdown increased the chances that the central bank will start its easing measures.
Elsewhere, the Aussie has been bullish on China’s exports and imports data released earlier today. Both indicators rose last year, according to the General Administration of Customs.
Thus, exports from the world’s second-largest economy rose last month 7.6% compared to the same period in 2018. It is the first increase in Chinese exports since July and the fastest growth since March. Imports last month surged by 16.3% year-on-year. In Yuan terms, 2019 exports and imports rose 5% and 1.6% year-on-year, respectively.
Yesterday, the US Treasury Department announced that Washington had removed China from a list of countries regarded as currency manipulators. The Chinese Yuan surged on the news. The two countries are expected to ink the phase one of a trade deal later this week.
The Aussie has been more confident also because concerns about intensifying fires eased after the US downgraded a travel warning for Australia. Nevertheless, the smoke affected preparations for the tennis grand slam event Australian Open in Melbourne.
The country is still struggling with one of the worst fire seasons ever, with wildfires burning since September. 28 people were killed since then, with the fires burning over 2,500 homes and razing land and forests the size of South Korea or Bulgaria.