GBP/AUD advances in early trading on Wednesday following a bullish session yesterday. The pair is now trading at 1.8898, up 0.22% as of 6:24 AM UTC. Nevertheless, the current quotation previously acted as resistance, so it is critical for the price to continue the uptrend in the following hours in order to keep the bullish momentum.
The markets continue to closely monitor the news about the phase one trade deal to be signed by the US and China later this week. Also, the UK is about to officially leave the European Union on January 31, entering a period of trade talks with the bloc.
Yesterday, Bloomberg Economics estimated that Brexit would likely to have cost Britain more than all its payments to the EU budget over the past five decades. According to the research, the cost of the UK’s withdrawal has already hit 130 billion pounds in lost economic growth, and a further 70 billion pounds in costs will be added by the end of this year.
The analysis, carried out by economist Dan Hanson, says that business uncertainty caused the British economic growth to stay behind the performance of other G7 nations during the last three years. Thus, the UK gross domestic product (GDP) is 3% smaller than it might have been without Brexit.
While UK Prime Minister Boris Johnson’s major victory relieved some of the uncertainty, investors are still concerned about the PM’s refusal to extend the Brexit transition period.
“As the UK comes to terms with its new trading relationship with the EU and grapples with the productivity challenge that has hindered growth since the financial crisis, the annual cost of Brexit is likely to keep increasing.”
The GBP/AUD pair is likely to become more volatile as the UK Office for National Statistics (ONS) is expected to release inflation data later today, including the consumer prices index (CPI), core CPI, retail prices index (RPI), and producer prices index (PPI) input and output.
In Australia, forecasts of rain and storms bring some relief, as the country is struggling with one of the worst fire seasons in its history.