GBP/AUD is surging on Tuesday, updating the highest level since February 3.
Currently, GBP/AUD is trading at 1.9451, up 0.43% as of 6:58 AM UTC. The rate peaked in the morning at 1.9454.
GBP/AUD – accelerated its rally after RBA minutes
While Reserve Bank of Australia (RBA) left the interest rate unchanged, the minutes of its February meeting show that it had left the door open for an eventual cut, citing a potential impact of the coronavirus outbreak.
“While it was too early to tell what the overall effect would be, the outbreak presented a material near-term risk to the economic outlook for China and for international trade flows, and thereby the Australian economy,” the RBA said.
The bank has maintained its easing rhetoric and stressed that its expectation rates would probably stay low for an extended period. Despite this, the RBA is sticking to its upbeat outlook of the economy’s potential.
Last year, the central bank cut the interest rate three times to a record low at 0.75%.
The minutes read:
“The outlook for the Australian economy was for growth to improve, supported by a turnaround in mining investment and, further out, dwelling investment and consumption. In the short-term, the effects of the bushfires were temporarily weighing on domestic growth, but the recovery was likely to reverse the negative effects on GDP.”
While the central bank expressed confidence in the long-term prospects of the economy, analysts interpreted its comments as dovish, citing the short-term challenges caused by the new coronavirus and following the bushfire crisis.
The bank admitted that the slow growth in income would continue to affect consumption over the next few quarters. Also, recent data showed that households were inclined to save more and reduce their debt.
The RBA expects no substantial increase in salary growth and anticipates the unemployment rate to maintain its current range. The bank said that jobs growth in the fourth quarter of 2019 was driven by part-time positions and expects weaker hiring in the first half of 2020, citing slower economic growth in the near term.
