The Reserve Bank of Australia (RBA) have chosen to cut interest rates to a record low of 1.25%, as it looks to turn around sluggish employment, wages and inflation. Financial markets have fully priced-in two RBA interest rate cuts for 2019 and are now considering the idea of a third if global trade tensions continue.
|Currency Pair||% Change (Month)||Difference on £200,000|
RBA governor Philip Lowe said last month the bank would "consider" the case for a rate cut this Tuesday, after first-quarter inflation data surprised on the downside and as other developments in the economy forced the RBA to cut its Aussie growth forecasts. Thus leading to the cut we saw today. RBA’s Governor Phillip Lowe is scheduled to make a statement following the decision last night.
However, it's the market response to the RBA today that's expected to power the Aussie higher during the days ahead, which could be more bad news for the Pound to Australian dollar rate. As the GBP/AUD interbank rate has currently dropped to levels under the new 1.82 resistance mark. The accompanying statement today could cause further market movement. For GBP/AUD the driving factors for the pair include Brexit and the future of the RBA forecast for the rest of the year to attempt to prompt growth for the economy.
Data is being a little overshadowed by the RBA decision, however they still give an insight into the future of the economy. GDP data on Wednesday morning for QoQ is expected to see a small increase from 0.2% to 0.3 % and YoY are predicted to increase from 2.3% to 2.5%.
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