The Reserve Bank of Australia unleashed another stimulus package yesterday causing the GBP AUD trading pair to go up. The Australian dollar was crushed after the RBA’s announcement yesterday.
RBA governor Philip Lowe delivered another major stimulus for the Australian economy as he and the RBA board decide rate cuts. The new interest rate level is the third adjustment for this year, following the June and July cuts.
In a statement, Lowe said that the rate cuts were needed to boost the faltering employment and economic situation of the country.
The RBA rate cut recorded an all-time low of 0.75% on Tuesday’s meeting. The rate cut also met with the market consensus and the forecast of analysts and the four major banks.
The pound sterling jumped as high as one percent against the Australian dollar in yesterday’s trading sessions. The GBP AUD exchange rate has reached levels between AU$1.8159 and AU$1.8381 in Tuesday’s trading.
The GBP AUD pair had a tough rally before yesterday’s gains. However, experts believe that the Australian dollar will regain its footing in the coming sessions.
Room for More Cuts
In his statement, the RBA governor did not deny, confirm, or mention the possibility of another rate cut. Analysts now believe that the door for deeper slashes is still open this year.
The RBA has set its inflation target and the country’s inflation has been below the 2% to 3% mark for years. And with the brewing trade war between the US and China, critics believe that there is more room to adjust the monetary policy of the Australian dollar.
The tit-for-tat US-China trade war is a headwind for the AUD because China is the biggest audience of Australian products. That is one of the main reasons with the Chinese yuan and Australian dollar moves like a tandem.