Monetary Policy Statement not the news Australia wanted to hear
Yesterday saw the Reserve Bank of Australia (RBA) interest rate decision followed by the monetary policy statement. Rates remained unchanged at 1.5% as widely expected. The monetary policy statement however did give an indication to monetary policy moving forward, there was expected to be a hawkish tone and traders sat with their fingers on the buttons ready to move. There was predicted to be an indication of a rate hike in the coming months, but this was put to bed as there was much more dovish tone as the monetary policy statement was delivered.
We saw Sterling rally against the Australian dollar but 1.70 seems to be a resistance point. I think we will need to see a significant catalyst for GBP/AUD to remain above 1.70.
In order for Sterling to make significant gains the UK needs to have a stable government in place. The DUPs influence on Brexit negotiations is not yet clear. There needs to be clarity on the UK’s stance in exit talks, there may now need to be more compromise on the UK’s side. The “have your cake and eat it” strategy no longer seems viable. If the UK wishes to control immigration it could be detrimental to trade and in order for trade to remain buoyant there needs to be a more lax stance on immigration, which if put in place goes against the vote to leave in the first place. It is a sad state of affairs, I think brought about by politicians with their own agenda.
There are several pending data releases which will influence GBP/AUD over the coming weeks. If you let me know the details of your requirement I will let you know which may be beneficial to your specific situation.
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