Pound Australian Dollar (GBP/AUD) Exchange Rate Rises as RBA to Consider Further Easing
The Pound Sterling Australian Dollar (GBP/AUD) exchange rate edged up and the pairing is currently trading at around AU$1.8156.
The Australian Dollar was left under pressure on Tuesday as the Reserve Bank of Australia (RBA) left the door open to further interest rate cuts.
The minutes from the RBA’s 3 September meeting revealed the bank would consider further easing if it was needed to support growth and achieve its 2% to 3% inflation target.
Markets have now priced in a further cut leaving the bank’s interest rate at 0.75% by the end of 2019.
Added to this, it is also expected the RBA will slash rates to 0.5% by early 2020.
This caused the Australian Dollar to slump 0.4% against the US Dollar, slumping to an 11-day low.
Commenting on this, National Australia Bank (NAB) senior FX strategist Rodrigo Catril noted:
‘They no longer talk about an accumulation of evidence in order to ease again, and highlight risks to the global economy. It certainly sounds a lot more dovish than before.’
PM to ‘Wait and See’ Before Deciding to Recall Parliament
Prime Minister Boris Johnson has said he would ‘wait and see what the judges say’ before deciding whether or not to recall parliament.
The Supreme Court is to hear two appeals and will then determine if Johnson acted legally in suspending parliament for five weeks.
Meanwhile, on Monday the Prime Minister visited Luxembourg for Brexit discussions with European Commission President Jean-Claude Juncker.
Sterling was left under pressure as the EC noted the UK had not come forward with a solution to the Irish backstop.
Added to this, Luxembourg’s Prime Minister, Xavier Bettel attacked Johnson’s approach, claiming the situation was a ‘nightmare’.
Bettel also noted that Johnson’s team had failed to put forward any serious proposals for a new Brexit deal.
Sterling sentiment remained muted despite Boris Johnson’s claims there was still a good chance the UK would leave the EU with a deal.
However, a dovish RBA left the ‘Aussie’ under pressure and Sterling was able to edge up.
Australian Dollar (AUD) Slides as House Prices Tumble
The ‘Aussie’ slumped as data revealed that in all but two of the country’s capital cities, house prices tumbled.
In the second quarter, the Australian Bureau of Statistics (ABS) revealed that prices slumped -0.7%, while annual prices fell -7.4%.
Falling house prices, this weekend’s oil attacks and concerns about the strength of the Australian economy all weighed on consumers.
Commenting on this, ANZ senior economist Felicity Emmett said:
‘This is a disappointing development and suggests expectations for tax and interest rate cuts to spur the consumer to lift the economy may be misplaced.’
Pound Australian Dollar Outlook: Will Better than Expected Inflation Buoy GBP?
Looking ahead to Wednesday, the Pound (GBP) could edge up against the Australian Dollar (AUD) following the release of UK inflation data.
Sterling could receive an upswing of support if August’s inflation rate rises higher than expected, and remains around the Bank of England’s target.
GBP could receive further support from August’s Retail Price Index.
If retail prices rebound from July’s stagnation, the Pound Australian Dollar (GBP/AUD) exchange rate could rise.
Comments are closed.