GBP/AUD: Aussie Drops 0.45% Amid Sluggish GDP Growth

GBP/AUD surges on Wednesday, with the Aussie losing ground after the Australian Bureau of Statistics (ABS) released GDP data for the third quarter. Besides, the AUD struggles amid weakening trade optimism.

Currently, one British pound buys 1.9057 Australian dollars, up 0.45% as of 6:32 AM UTC. Thus, the pair is extending the bullish trend that started yesterday, recovering more than half of the losses caused by a downtrend that lasted from November 29 to December 3. On larger timeframes, the price continues to move in ups and downs since mid-November, showing no clear trend.

Australian economy slowed in the third quarter, as interest rate cuts couldn’t boost consumer spending. The markets anticipate that the central bank will have to maintain its easing stance next year.

In the three months through September, GDP rose 0.4% compared to the second quarter, while analysts expected 0.5%. In annual terms, the economy expanded by 1.7%, in line with economists’ forecasts.

The ABS report on the GDP growth comes a day after the Reserve Bank of Australia (RBA) held interest rates at 0.75% after three cuts since June.

The quarterly GBP gain is way below the RBA’s expectation of a rise close to 0.7%. The sluggish growth also puts pressure on Prime Minister Scott Morrison, who implemented a series of tax cuts in July, hoping that the move would boost the economy so that a significant fiscal stimulus was not needed.

Nevertheless, households were reluctant to spend. The 0.1% increase in consumption was the weakest since the global financial crisis in 2009.

National Australia Bank (NAB) economist Kaixin Owyong commented:

“This suggests that the underlying health of the economy has deteriorated further and is likely to put upward pressure on the unemployment rate. That reinforces our view that further monetary easing is needed.”

NAB is the last of Australia’s big four banks to lower its interest rate forecast for 2020. The bank now predicts two rate cuts next year — in February and June — which would take the benchmark rate to 0.25%.

NAB economists said:

“We think monetary policy will have to continue to do the heavy lifting given that there has been little response to date on the fiscal front.” is a news site only and not a currency trading platform. is a site operated by TransferWise Inc. (“We”, “Us”), a Delaware Corporation. We do not guarantee that the website will operate in an uninterrupted or error-free manner or is free of viruses or other harmful components. The content on our site is provided for general information only and is not intended as an exhaustive treatment of its subject. We expressly disclaim any contractual or fiduciary relationship with you on the basis of the content of our site, any you may not rely thereon for any purpose. You should consult with qualified professionals or specialists before taking, or refraining from, any action on the basis of the content on our site. Although we make reasonable efforts to update the information on our site, we make no representations, warranties or guarantees, whether express or implied, that the content on our site is accurate, complete or up to date, and DISCLAIM ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Some of the content posted on this site has been commissioned by Us, but is the work of independent contractors. These contractors are not employees, workers, agents or partners of TransferWise and they do not hold themselves out as one. The information and content posted by these independent contractors have not been verified or approved by Us. The views expressed by these independent contractors on do not represent our views.