Overnight, the RBA (Reserve Bank of Australia) Minutes signalled what lies ahead with key areas of focus being the labour market and monitoring economic growth. Australian interest rates were cut to the lowest levels on record of 1% this July, but with limited further commitment to cuts at that time, the market is asking what lies ahead next from the RBA.
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The latest news overnight is that the RBA is ready to adjust rates if they need to. Gareth Aird, a senior economist at Commonwealth Bank has commented on CNBC that he thinks the RBA will ‘leave the cash rate unchanged over the next few meetings.’
With the current rate at 1%, the Reserve Bank of Australia is running out of room and whilst there is a longer-term expectation more cuts may come, it appears from the RBA commentary it will be data dependant. This Thursday 18th is the latest Australian unemployment data, which could be important given the RBA’s reliance on it in their decision making.
On Sunday evening, Chinese economic news released highlighted a poor showing for annual GDP (Gross Domestic Product) data. The disappointing year on year numbers showed 6.2% growth, which was loosely in line with many economists’ forecasts. Despite this, the month on month data was positive, coming in at 1.6% growth versus the 1.5% prediction. Much of the growth too has been coming from domestic demand. So, whilst the news is on the face of it poor, because of the lowest level in 27 years, the concerns are not as great as they appear.
Also, growth of 6% is something most Western economies can only dream of, with the UK struggling to get above 1% and according to some reports headed for recession.
GBP/AUD levels have nudged almost the best for selling AUD for pounds in 2019, retesting the interbank lows seen in February at 1.7865 being broken yesterday. We have this morning just broken the 2019 records of 1.7767 seen on the 11th January, current interbank low for GBP/AUD today is 1.7765.
With no sign of Brexit being resolved, we are still having to take into consideration the prospect of a no-deal Brexit, therefore the pound may remain under pressure. The Conservative leadership election on the 22nd July is an upcoming event which in providing more news on who is the next PM, may trigger some volatility. Clients looking to buy or sell the pound against the Australian dollar should feel welcome to contact our team to get a breakdown of the latest news and events to move their rate.
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Excellent initial guidance, and during the transaction regular communication and updates. Dealing with Jonathan Watson was a pleasure. Very reassuring.
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