The pound to Australian dollar exchange rate could be dealt some fresh news this week with the latest news on Brexit, and also the latest economic news from Australia, plus news on the Trade Wars. All of these issues are linked with movement on the pairing and may be events to watch this week, for clues as to further possible exchange rate movements ahead.
Brexit developments causing volatility for GBP/AUD rates
On Brexit, further turbulence over the weekend stemmed from Amber Rudd quitting the cabinet which has increased the attention on an already shaky and uncertain British government. There is also attention being received from the latest UK GDP (Gross Domestic Product) data, which showed that the economy grew better than expected in July at 0.3%, rather than the 0.1% predicted.
Looking further ahead, Brexit is still to be resolved, and this issue has been a major thorn in the side of the pound. Whilst it appears that the Brexit will be delayed from the 31st October owing to the legislation passed, there could still be efforts to thwart the plans by the Government.
Potential cut to RBA interest rate cuts
Expectations ahead for the Australian dollar could be more closely linked to domestic issues down under, including the prospect of the Reserve Bank of Australia (RBA) to cut interest rates. There has been increasing evidence that the Australian economy requires some extra support, with inflation earlier this year touching decade lows.
Consumer Inflation expectations are released on the Thursday and alongside more global news on the Trade Wars, could be an important issue to consider for the Australian dollar. By looking to cut interest rates in the future, the RBA could be on a path to weakening further the Australian dollar.
The raising and lowering of interest rates are a key factor for most currencies, generally a lower interest rate makes a currency less attractive to hold and weakens it, whilst a higher interest rate does the opposite.
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