* Johnson sets new Brexit deadline at end of 2020 - ITV
* Pound falls 0.7%, further away from 1 1/2-year peak
* Aussie drops after RBA opens door to Feb rate cut
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Hideyuki Sano
TOKYO, Dec 17 (Reuters) - The British pound fell on Tuesday
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 GBP=D4 , 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. The move dashes hopes Johnson would take a flexible approach
to the end-2020 deadline for a trade deal with the EU after
Britain leaves the bloc, which now looks almost certain to
happen on Jan. 31 following the landslide Conservative election
"Common sense suggests that crafting a trade deal would take
at least more than a year, so markets had assumed that the
transition period will be extended," said Masafumi Yamamoto,
chief currency strategist at Mizuho Securities.
"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," he added.
The pound last stood at $1.3286, down 0.3% from late U.S.
levels.
The Australian dollar lost 0.2% to $0.6868 AUD=D4 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.
Minutes of its December policy meeting out on Tuesday,
showed the central bank's board was concerned that wage growth
was too weak to revive either inflation or consumption.
Other major currencies saw limited moves as investors sought
more details on an interim trade deal the United States and
China struck last week. 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 JPY= , 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 EUR= , 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.
"There is some scepticism, but on the whole, the deal is
likely to lift corporate sentiment. Even though we may not see
lively market moves in coming couple of weeks due to holiday
seasons, we are likely to see gradual rise in risk assets," said
Masaru Ishibashi, joint general manager of trading at Sumitomo
Mitsui Bank.
"Some emerging market currencies are already starting to
price that in," he added.
The Mexican peso rose to a five-month high of 18.921 per
dollar MXN=D3 , also helped by a new trade deal with the United
States and Canada signed last week to replace the 1994 North
American Free Trade Agreement (NAFTA).
Economic data from the United States also underpinned the
improved mood around the global economy.
Data out on Monday showed the U.S. economy remained robust,
with U.S. homebuilder sentiment surging to its most optimistic
reading in more than 20 years USNAHB=ECI , way past market
expectations for a flat reading.