Will Australia cut interest rates soon and the impact on the pound vs the Australian dollar

Will Australia cut interest rates soon and the impact on the pound vs the Australian dollar

The Australian dollar has been struggling against the pound during the last few days after lower than expected inflation data published yesterday morning. Expectations were for a fall from 1.8% to 1.5% and we saw the figures falling even further to 1.3% for year on year.

This caused the Australian dollar to weaken against the pound with GBP/AUD exchange rates hitting their best rate to buy Australian dollars in 3 weeks.

With inflation falling this is likely to put further pressure on the Reserve Bank of Australia (RBA) to consider cutting interest rates with odds having increased now to 70% that a rate cut may even happen next month.

However, as the Australian election is due to take place on Saturday 18th May I think the RBA may just keep rates on hold rather than change things as a political change in leadership could cause a lot of volatility so the RBA may wish to keep interest rates as they are rather than add to the volatility.

The Australian economy has also been under pressure in recent times for a number of different reasons one of which has been the ailing property market. Property prices across the country have fallen and a central bank will often look at cutting interest rates in order to give the sector a boost.

Tomorrow brings with it the latest Import & Export data and tomorrow afternoon the US will release their latest set of GDP data for the first quarter of 2019. This will often have a bearing on global risk appetite and will often cause the pound to move against the Australian dollar so make sure you keep a close eye on the release as this could cause a lot of volatility on GBP/AUD exchange rates.

Australia is celebrating ANZAC today so if you’re in Australia and reading this report then I hope you’re enjoying the celebrations!

If you would like to save money on exchange rates compared to using your own bank when buying or selling Australian dollars and would like a free quote then contact me directly using the form below. I look forward to hearing from you.