The British pound continues its decline against the Australian dollar. On Tuesday morning, the pair is trading at 1.8649, down 0.33% as of 05:26 AM UTC.
The price is moving within a bearish channel that started to form in mid-October.
The Aussie looks stronger today after the Reserve Bank of Australia (RBA) kept its interest rate unchanged.
RBA Maintains Interest Rate at 0.75%
A few hours ago, the RBA met in Sydney to decide the interest rate and update the monetary policy. The central bank left the cash rate unchanged at 0.75%, in line with analysts’ expectations. The RBA is now monitoring the effect of the previous three rate cuts since last June.
The central bank argues that an increase in housing prices will support household wealth and confidence, thus leading to higher consumer spending.
Nevertheless, RBA Governor Philip Lowe admitted that the board was open to further easing to support the economy. He commented:
“Given global developments and the evidence of the spare capacity in the Australian economy, it is reasonable to expect that an extended period of low interest rates will be required. [RBA] is prepared to ease monetary policy further if needed to support sustainable growth in the economy.”
After the rate decision, the RBA presented its updated outlook for the Australian economy, which was little changed from August. The central bank expects the GDP growth to be about 2.25% this year and 3.00% in 2020.
UK Retail Sales Show Weak Growth Ahead of Election
British consumers aren’t ready to spend more ahead of December election, even though retailers offer big discounts.
Earlier today, the British Retail Consortium (BRC) said that retail spending increased by 0.6% year-on-year last month, the fastest pace since April. However, the BRC stressed that the longer-term outlook is still weak. The annual average of sales growth contracted to 0.1%.
BRC CEO Helen Dickinson commented:
“With Brexit still unresolved and a December election creating new uncertainties, retailers will be looking nervously at the months ahead.”
Economists argue that the recent decline in consumer spending increases the risk of a recession as the UK is getting ready to leave the European Union.