With the looming Election this weekend, how will the RBA react to the Brexit vote, could we see Interest rates fall again?

We are now beginning the second stage of the Brexit fallout, we have witnessed the initial shock and the impact on world markets. As economies adjust to the changes central banks may look to protect themselves from a prospective recession by cutting Interest rates, Australia could be the first in line.

Before the Referendum a number of economists were under the assumption that the RBA would cut Interest rates in August if consumer price figures released in July come in worse than anticipated. Could the RBA hit the panic button after the Election?

Will GBPAUD rates move back to 2.0?

With the uncertainty surrounding the Brexit, Pound Sterling is likely to remain on the weaker side however the Aussie election this weekend could see a welcome boost to GBPAUD rates as discussed in yesterday’s report.

I do however, remain sceptical that the elections alone will push rates close to the 2.0 mark, but the potential for a further rate cut in July or August could see rates closer to pre-Brexit rates. When the RBA cut rates by 25 basis points in May GBPAUD rates jumped 10 cents on the news although the uncertainty surrounding Brexit will likely cushion any impact.

GBPAUD rates are currently at similar levels to April 2016 which in comparison to the bulk of 2013, remain attractive. If you are looking to buy Aussie Dollars but want to wait for rates to change the option of a limit order could be worth exploring. We will automatically purchase your currency once GBPAUD exchange rates are in line with your target. Speak to one of our knowledgeable brokers to find out more.

Alternatively, if you are looking to sell Aussie Dollars for Sterling, doing so ahead of the election could be worthwhile, current AUDGBP exchange rates have not been seen for over a year. So dont hesitate to call us on 01494 725 353 with your questions.


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