On Tuesday RBA is taking its decision about the interest rate. Economists forecast that the central bank will leave the rate at the same 1% level. But last week we noticed some verbal interventions from RBA officials. RBA Deputy governor G. Debelle stated: ‘The Australian dollar has come down some and may well go down further. A further fall in the Australian dollar would be helpful to the economy’.
There are small improvements in the Australian economy since our last review of it at the beginning of July. Thus, the trade balance in June was better than a month ago – the surplus was 8B dollars against almost 6.2B in May. Retail sales in June rose by 0.4%.
Meanwhile, Manufacturing PMI in the UK dropped to the lowest level since 2012. According to the market’s ongoing global trade tensions, slower world economic growth and Brexit uncertainty were all mentioned by manufacturers as factors contributing to reduced overseas demand. There were reports that some EU-based clients were routing supply chains away from the UK due to Brexit. Inflows of new work from the USA and Asia also weakened’.
Picture 1. GB Manufacturing PMI.
We assume that GBP will continue to weaken against all other currencies. After reaching its resistance level 1.82000 GBP/AUD started plummeting.
Technically on daily TF, the trend is more bearish. The linear regression line is falling down. GBP is trying to break its local support line down. If bears succeed the next support level may be found at 1.78500. Trend indicators reversed and now they are confirming the bearish tendency.
Picture 2. GDP/AUD 1D TF