In the early hours of tomorrow morning the Reserve Bank of Australia will provide their latest thoughts on the Australian economy and reveal the latest interest rate meeting decision. The RBA are expected to leave rates on hold, which will be the 13th month in a row without a change.
The economic growth in Australia has been steady over the last few months, moving in line with the RBA’s forecasts. There is expected to be an interest rate hike in the middle of 2018 and following on from previous statements the central bank want to see rates return to 3.5% over the next few years. It could be a tough task to complete all the hikes to reach that level in this decade but if global uncertainty does slow up then the hikes have more chance.
Australian economic data due this week
Following on from the RBA’s interest rate decision there is Trade Balance data which is due on Thursday and Home Loans data on Friday morning. Whilst these are not extremely significant releases there is an added importance when future rate decisions could be affected by their outcome. If the data throws up any surprises then that could cause some AUD movement.
Will the GBP/AUD rate drop?
The big question over the next few weeks is will the rate fall below 1.60. The GBP/AUD has settled around the lower 1.60s, however a one percent movement either way could really change the landscape. Sterling appears to have hit a resistance barrier whilst falling and any movements could be caused by Aussie Dollar strength or weakness.
Sterling’s only real hope for a jump will come from the Brexit talks and their progression. If we start to get more clarity from the negotiations and there is an indication of how trade agreements will work after the 2019 split, that could be the time the GBP/AUD rate starts moving back towards the 1.70 level.