The Australian dollar fell nearly half a percent on Tuesday after the central bank opened the door to another cut in interest rates as early as February while the pound tanked on reports that Prime Minister Boris Johnson was seeking a hard line on Britain’s transition period after Brexit.
The Australian dollar lost 0.4% to $0.6868 after minutes of its December policy meeting showed the central bank's board was concerned that wage growth was too weak to revive either inflation or consumption.
The downside may be limited, however, as investors were cautiously optimistic over an interim trade deal the United States and China struck last week which fuelled gains in emerging market currencies and capped the yen and Swiss franc.
The deal, announced on Friday after more than two-and-a-half years of volatile negotiations between Washington and Beijing, will reduce U.S. tariffs on Chinese goods in exchange for increased Chinese purchases of some U.S. goods.
The pound was the other big loser in early London trading after reports that Johnson’s revised Withdrawal Agreement Bill would require the United Kingdom to have arrangements to leave the European Union in place by Dec. 31 next year.
Against the dollar, the British currency fell 0.7% to $1.3236 in early Asian trading and was hovering slightly above that level at $1.3253. It is down nearly 2% below a post-election high of above $1.3516 hit on Friday.
Source : Reuters