The GBPAUD exchange rate could see some volatility this week with British growth data and Reserve Bank of Australia meeting minutes released.
GBPAUD – Daily Chart
The price of GBPAUD has been looking to secure a support level at the spike high seen above the 2 level. That will be an important test in the days ahead.
GDP growth data will be released for the British economy on Monday at 3pm HKT. Analysts are expecting a year-on-year 1% return and a monthly growth figure of 0.1%. However, the recent Bank of England meeting said that there would be 0% growth in the next two quarters and the pound may find it hard to sustain the price gains above the 2 level vs the Aussie dollar.
The Australian economy has data on Tuesday with Reserve Bank of Australia meeting minutes released at 8:30am HKT. A positive spin for the RBA could see a medium-term top in the GBP v AUD.
Home Loans founder Mark Bouris called on the RBA to cut interest rates at its next meeting in February, warning fellow Aussies that a recession was looming. He argued that continued high rates could aggravate economic conditions and lead to a full-blown recession. He said that interest rates needed to be raised to fight inflation, but had served their purpose.
“But now, the negative impacts of high interest rates outweigh the benefits,” he said.
“High interest rates have slowed the economy to the point whereby we’re on the verge of a full-blown recession”.
The RBA left its cash rate on hold at 4.35% in its last board meeting for 2024 while stressing that an underlying inflation rate of 3.5% was still too far from its 2 to 3% target.
With a slowing economy, the UK is likely to see rates cut again and the pound may find it hard to continue the recent run against the Aussie currency.
