The Reserve Bank of Australia kept Aussie interest rates on hold as expected which moved GBPAUD below 1.80 again. Owing to recent strengthening of the Aussie particularly against the Pound and Euro governor Glenn Stevens has suggested the AUD could harm economic growth going forward. He did go on to say that he ‘expects a period of stability in interest rates’ which could keep the Aussie strong.
This was the third time in a row that he has used this phrase and it is designed to increase confidence for both business and consumers. The only slight difference compared to last month’s statement was that the recent rise of the Aussie Dollar could harm economic growth.
I think longer term we could see the RBA begin to start talking the Aussie Dollar down if the currency continues to get stronger.
Personally I think we will see GBPAUD exchange rates improve in the longer term as the Australian economy appears at the moment too dependent on the mining economy and with the Chinese economy forecast to grow at 7.5% this year this could mean less demand for Australian natural resources.
Recently Stevens suggested that the shift for the economy would be to focus on construction growth. However, with house prices still rising down under it could be a bubble that’s set to burst.
With building permits data due out tomorrow morning we could see some volatility for GBPAUD exchange rates.
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