LONDON (Reuters) – Australia’s dollar approached five-month highs on Tuesday, benefiting from optimism about improved U.S.-China trade relations, with currency markets elsewhere mostly quiet at the start of the holiday season.

Sterling, which has fallen for five straight days, was under pressure again as worries about a disruptive Brexit and reduced liquidity combined to hurt the currency.

The dollar and euro remained in their recent trading range just below $1.11 EUR=EBS.

The Aussie tends to do well optimism grows over global trade and China’s economy. The United States and China have announced phase one of a trade deal and markets, despite a lack of details, see the agreement as a de-escalation in their long-running trade dispute.

The Australian dollar rose to as much as $0.6930 AUD=D3, within striking distance of its Dec. 13 peak of $0.6939, its highest level since late July. The currency has gained more than 1% in the past four sessions.

Tohru Sasaki, head of research at J.P. Morgan, said the Aussie’s strength probably “reflects waning concerns over geopolitical risks.”

The New Zealand dollar NZD=D3 traded at $0.6638, just below a five-month high of $0.6639 hit on Monday. Emerging- market currencies were also supported.

Sterling weakened to $1.2930 GBP=D3 after reaching a three-week low of $1.2905 on Monday.

The pound has fallen since Prime Minister Boris Johnson ruled out extending the transition period before Britain leaves the European Union beyond December 2020. Many worry that leaves too little time to negotiate a new trade deal with the EU.

“We expect investor concern about cliff-edge Brexit risk to diminish, as political incentives do not support the risk of economic disruption,” said Steve Englander, head of global G10 FX research at Standard Chartered bank.

“That said, there is no reason to expect political brinkmanship to diminish; this is likely to be reflected in high volatility. We see the GBP becoming stronger, but on a jagged path.”

Against the euro, sterling was flat at 85.75 pence EURGBP=D3.

The dollar index, which measures the U.S. currency against a basket of currencies, edged up to 97.721 .DXY.

Against the Japanese yen the dollar was unchanged at 109.38 JPY=EBS.

Graphic: World FX rates in 2019 here

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