RBA Minutes to provide hints of economic aid
Overnight the RBA will release its meeting details from the 7th July which will give markets an insight into the economic sentiment following the ongoing Brexit uncertainty. Earlier this month the RBA decided to keep Interest rates on hold stating that decent economic growth was the main driver.
Inflation remains on the low side which leads some to believe they could cut rates again the foreseeable.
They made a decision not to cut rates at the previous meeting due to uncertainty around the general elections. The minutes will detail the conditions required for an Interest rate cut and in the event these requirements are met, rate cuts could happen leading to the Aussie Dollar to potentially weaken.
Does an interest rate cut seem likely?
One of the conditions will likely be low inflation, and the next figures will be released on July 27th. But low inflation has been persistent in Australia and with the winter months now coming, it’s looking more likely than not that they will cut rates in the next update. Those looking to buy Aussie Dollars should keep an eye on the consumer price figures on the 27th of July, there could be opportunities on the horizon.
Will GBPAUD exchange rates go back to pre-Brexit levels?
It’s unlikely in the foreseeable that GBPAUD rates will move back to the 2.0 levels seen prior to Brexit until investors have a clearer picture to what direction the UK is heading. I therefore expect rates to remain in the mid 1.70’s low 1.80’s. That being said an Interest rate cut by the RBA could give buyers opportunities that may not be around for long. Brexit is expected to be a long bumpy road and Sterling could remain on the weaker side for at least the next year or two.