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- AUD advances after Lowe hails economic turning point.

- Says AU growth likely to pick up at slow but steady pace.

- Neglects to signal panic at further increase in joblessness.

- But CBA and Barclays warn more RBA cuts are still coming.

- Barclays latest to eye new decade-low for AUD/USD up ahead.

- But GBP/AUD rate tipped by Barclays for losses into year-end.

The Australian Dollar trounced its major rivals Tuesday as the odds of a Reserve Bank of Australia (RBA) interest rate cut in October appeared to lengthen, although multiple analysts are warning the bank could still cut rates again and further wound the antipodean currency in the months ahead.

Reserve Bank of Australia Governor Philip Lowe hailed a perceived turning point for the Australian economy in a speech to the Armidale Business Chamber Tuesday, saying growth should pick up steadily from here, although he also noted that the anticipated expansion will softer in the quarters ahead than it has been in recent years.

The comments came just days after Australian Bureau of Statistics data revealed a further pick up in the unemployment rate, to 5.3%, which led markets to believe that a third 2019 interest rate cut could be announced by the RBA as soon as October. But the odds of that cut were lengthening again during the noon session Tuesday.

"Lowe did not signal a RBA interest rate cut is imminent as implied by Australia’s OIS curve," says Elias Haddad, a strategist at Commonwealth Bank of Australia. "CBA Economics anticipate the RBA to cut the cash rate by 25bps in October 2019 and February 2020 largely because labour market slack in Australia remains plentiful and downside risk to global growth is high. Expectation of more RBA rate cuts is an AUD headwind."

Above: AUD/USD rate shown at 4-hour intervals.

The RBA has cut its cash rate twice this year in the hope of meeting its inflation target by stimulating the economy with lower borrowing costs, although it's facing an uphill battle in order to get inflation back within the 2%-to-3% target band because Aussie consumer spending has weakened due to a downturn in the domestic housing market and the outlook for the economy continues to be buffeted by the U.S. trade war with China.

However, the bank left the cash rate unchanged in the first week of September after having said in August it'd like to see an "accumulation of additional evidence" that more cuts are necessary before acting again. That led markets to believe a pause in the RBA rate cutting cycle could be afoot, which is a notion that traders appeared to favour again on Tuesday. But not everybody is buying the idea of a pause.

"We expect AUDUSD to fall further in Q4, as front-loaded RBA easing offsets temporary positives from better risk sentiment and the improvement in the US-China trade outlook. We expect AUDUSD to fall to fresh decade lows of 0.6650 in Q4 and extend losses in Q1, as global risks resurface," says Ashish Agrawal, an analyst at Barclays.

Agrawal and the Barclays team are forecasting two more rate cuts from the RBA inside 2019, which would take the cash rate down to 0.5% and is expected to push the AUD/USD rate down to a fresh decade-long-low of 0.6650 later this year, although the Aussie is tipped to fall even further to 0.6550 by the middle of 2020. Westpac, one of Australia's largest lenders, reiterated a similar set of forecasts last week.

Above: AUD/USD rate shown at monthly intervals.

RBA rate cuts have seen the Aussie fall from grace among investors, who used to earn a yield premium from owning the Aussie instead of other currencies because of its typically higher interest rates. Australian rates are now only half those offered to savers in the U.S., which is a significant part of why Barclays is tipping the AUD/USD rate to decline in the weeks ahead.

Australia's Dollar could catch a break when it comes to Pound Sterling in the weeks ahead as the Brexit Saga enters its penultimate chapter, ensuring that uncertainty about future trade arrangements and volatility in British exchange rates reaches fever pitch. Barlcays forecasts the Pound-to-Australian-Dollar rate will fall to 1.77 by year-end, from 1.8364 on Tuesday, as financial markets respond to a 'no deal' Brexit becoming more likely.

Barclays says a 'no deal' Brexit is now its 'base case' but that, if it happens at all, it's likely to happen only in the first quarter of 2020. The bank reiterated its forecasts on the same day the Supreme Court declared the government's suspension of parliament to be unlawful in a landmark and highly controversial ruling, the full constitutional consequences of which are not yet known.

"Because we anticipate significant dislocations on both sides of the English Channel, we see the UK falling into a shallow recession despite expected fiscal expansion and easier monetary policy. We expect a sharp depreciation in GBP to accompany the initial stages of a no-deal Brexit," says Nikolaos Sgouropoulos, a Barclays colleague of Agrawals. "However, once the initial uncertainty created by short-term dislocations clears, we believe the nearly 50-year low in the real effective value of GBP should attract significant long-term buyers and investment to an economy that still has many attractive attributes. In our forecasts, this leads to a partial rebound in GBP."

Above: Pound-to-Australian-Dollar rate shown at daily intervals.

Opposition MPs and 'rebels' from within the governing Conservative Party, with help from an apparently partisan Speaker of the House of Commons, successfully hijacked the parliamentary agenda this month and imposed upon the government legislation that requires Prime Minister Boris Johnson to request a third Brexit delay no later than October 19 if an exit agreement has not been reached with the EU up until that point.

If such a request is not approved by the EU before October 31, and a deal not agreed, a 'no deal' Brexit will take place at 23:50 on Halloween. Most analysts say that would lead to further punishing losses for Sterling, and PM Johnson continues to insist that he will not request any extension of the Article 50 period if the talks fail, despite the law recently made in parliament.

Johnson has twice now requested the support of MPs from the opposition, other parties and his own party for a general election to be held in which the public can then decide the path ahead on Brexit but MPs have rejected the idea. They claim the government doesn't have a mandate for its Brexit policy, which is to leave the EU at the end of October irrespective of whether talks aimed at securing a negotiated exit have been succesful, and are demanding a third delay before going back to the ballot box.

The government claims it does have a mandate for such action. It has long said its policy is to leave the EU with a deal but that "no deal is better than a bad deal" and has consistently said that such an outcome must be planned for, while the familiar refrain of "no deal is better than a bad deal" was repeated in the Conservative Party manifesto of 2017.

Parliament itself voted to make a 'no deal' Brexit the default outcome in law in the event that it hadn't approved a withdrawal agreement before the scheduled departure date. It rejected former Prime Minister Theresa May's withdrawal agreement three times before the original Brexit date of March 29 2019, leading the then-PM to request two extensions of the Article 50 negotiating period.

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