GBP/AUD cannot reverse the bearish trend even after the Reserve Bank of Australia (RBA) cut its interest rate to a record low at 0.50%. Currently, one British pound buys 1.9391 Australian dollars, down 0.33% as of 6:30 AM UTC. The pair has lost about 1.60% since the start of the week, with no bullish session so far.
Australian Economy Rose 0.5% in Q4
While the Australian central bank surprisingly cut the interest rate to a record low, the Aussie has been supported by a series of positive economic data. Earlier today, the Australian Bureau of Statistics (ABS) released the gross domestic product (GDP) data for the fourth quarter of 2019. According to the report, the economy beat expectations, easing fears of a recession despite one of the worst fire seasons and the coronavirus outbreak.
The ABS said that the growth of Australia’s GDP accelerated by 0.5% last quarter. Also, data from the third quarter was revised upwards to reflect an increase of 0.6% from 0.4% reported previously. Thus, the annual growth pace reached 2.3%. Economists polled by Reuters expected a quarterly growth rate of 0.3%.
The report also showed that household spending rose 0.4% and government spending added 0.7%, contributing to the GDP growth with 0.2% and 0.1%, respectively. Elsewhere, dwelling and non-dwelling construction each slashed 0.2% from GDP. The savings rate fell to 3.6% from 4.8% in the third quarter.
However, the outlook for the current quarter and year are not that optimistic, as the coronavirus crisis is hurting the global economy and has severely hit China, Australia’s largest trade partner and source of tourists.
The RBA cut its rates to a record low yesterday to address the risks caused by the virus.
NAB’s chief economist Alan Oster commented on the situation:
“We view this shift in fiscal policy as a very positive development, but still expect further support from the RBA will be required given the extent of the shock and since the economy was underperforming prior to the outbreak.”
Some economists anticipate another rate cut this April and suggest that the RBA would have to think about quantitative easing measures to stimulate the economy.
