RBA Interest Rate Outlook does not bode well
There were no surprises during the early hours as the Reserve Bank of Australia (RBA) decided to keep rates on hold at 1.5%. The RBA stated the need for consistent and sustainable growth before a hike would be considered. I am of the opinion it could be 2019 before a hike. The Aussie has suffered as a result.
GBP/AUD – The Pound had made significant advances following a host of positive data, but this was followed by some very poor figures. Some have attributed the fluctuations to the beast from the east weather conditions although there is concern there could be serious problems with the economy in general. There was widely expected to be a rate hike from the Bank of England (BOE) in May, but following the worst GDP figures for five years last week this could well be put on hold.
Despite this, I think current buoyancy levels between 1.80-1.85 will remain. The big picture is that Sterling is chronically undervalued and GBP/AUD is only at current levels due tot he uncertainty surrounding Brexit. Clarity on the matter will strengthen the pound, keep in mind pre-Brexit levels were 2.20 +. If you are an Aussie seller mover at 1.81-1.82. Aussie buyers 1.84 if you have to move short term.
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