Australian Dollar Continues to Climb after Stronger GDP

The Australian dollar has continued to strengthen after yesterday’s very strong GDP numbers. The Australian economy has grown 3.1% over the last year, considerably more than expected which has resulted in a sustainable rally. The figures are in fact the highest since 2012 which lends a huge amount of support for the dollar.

Considering that exports are on the up, building approvals and car sales are at record highs and unemployment is at a two and half year low then it would suggest the dollar could be in position to start clawing back some of that heavy ground it has lost in the last few weeks.

Next Tuesday however sees the Reserve Bank of Australia’s interest rate decision. Although another rate cut has been mooted I feel this would be highly unlikely at this time having seen such a big jump higher in the GDP numbers. The RBA will surely save any such cut for when it is really needed.

The markets should realistically now be pricing out that perceived cut and so a move lower for GBP AUD seems the most likely path. The UK referendum on whether to remain in the EU should also play its part with sterling weakness to be expected. A move lower to 1.95 for GBP AUD should be on the horizon.


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