Will the RBA cut interest rates this week? (Tom Holian)

AUD GBP Lower Ahead of PMI Data for the UK Economy

With the RBA cutting interest rates a number of times during 2012 this year will be an interesting time to see if the RBA continues to cut so ruthlessly as it did last year. The RBA are due to meet on February 5th but my personal feeling is that there will be no rate change this week. My reasoning is that we are still at the beginning of the year and the country seems to have stabilised recently. With GBPAUD exchange rates dropping to 1.49 in January over the last couple of weeks we have seen it return to as high as 1.53 even though Sterling seems to be struggling against all its other major currency pairs.

With Chinese data remaining fairly robust as of late and a new Chinese PM who joined us in late 2012 the Australian Dollar has remained strong owing to what seems to be happening in China. One Of the problems more long term for this year could be the problems of the buoyant mining industry and all other parts of the economy in Australia. I for one think his period is cyclical and think we will hit 1.60 toward the end of Q2 if the UK staves off recession. As the global economy begins to improve this means there is more risk appetite but with Australia so reliant on one country I think it could experience some problems in the next few months.

Keep your eyes on the RBA statement released shortly after the rate decision as this will provide investors with some guidance as to what may happen next month which will have a bearing on the Australian Dollar exchange rate. If you are based in the UK and want to be kept up to date feel free to contact me directly via email Tom Holian [email protected] If you would like more information on Sterling Euro information this weekend click on www.poundsterlingforecast.com  to find our more