Australia will steer clear of recession in the foreseeable future, in the view of economists at Rabobank. Thus, the Aussie is expected to be resilient this year.

GBP/AUD to drop under 1.70 over coming months

“We expect the AUD to be well supported this year on the back of a relatively good growth outlook and have been targeted a move by GBP/AUD below 1.70 on a 12-month view. However, Australian/Chinese relations are likely to remain a dicey subject.” 

“While the Australian economy is expected to slow overall this year, recessionary risks appear low. This should increase the resilience of the AUD and provide insulation against headwinds implied by forecasts of a slowdown in global growth.”

“Weaker global growth is traditionally a bearish factor for the AUD given its links with commodity prices. That said, we view the AUD as less likely to be swayed by speculative flows given that Australian no longer had a current account deficit and given that the narrowing of interest rates spreads between Australian and US interest rates.”