Pound stumbles on reported new Brexit deadline; Aussie dollar slips on RBA

The British pound fell on after reports UK Prime Minister Boris Johnson was seeking a hard line on Britain’s transition period after Brexit, while the Aussie dollar dropped on a downbeat tone from the nation’s central bank. Sterling dropped as much as 0.7% to $1.3236, as its Friday's 1-1/2-year peak of $1.3516 looked increasingly like a near-term peak following the massive relief rally after last week's UK election.

Johnson’s revised Withdrawal Agreement Bill would require the United Kingdom to have arrangements to leave the European Union be in place by Dec. 31 next year, UK broadcaster ITV reported on Monday. It seems like the big majority Johnson won is enabling him to take a hard line approach, which the market doesn’t like so much... Considering the UK economy looks set to deteriorate as people and companies start to leave the country because of Brexit, sterling’s short-covering rally is over.

The pound last stood at $1.3286, down 0.3% from late U.S. levels. The Australian dollar lost 0.2% to $0.6868 after the Reserve Bank of Australia opened the door to another cut in interest rates as early as February, should household incomes stay depressed or the labour market takes a turn for the worse. The deal has broadly capped safe-haven currencies, such as the yen, and supported risk-sensitive currencies. Against the yen, the dollar traded at 109.56 yen, up 0.05% from late U.S. levels, having gained 0.15% on Monday to edge near six-month high of 109.73 hit on Dec. 2. The euro stood at $1.1147, maintaining its uptrend from its seven-week low of $1.1098 touched on Nov. 29. The deal, announced on Friday after more than two-and-a-half years of volatile negotiations between Washington and Beijing, will reduce some U.S. tariffs on Chinese goods in exchange for increased Chinese purchases of some U.S. goods.