FTSE Mining Shares Suggest that Pound Sterling (GBP) has Peaked against Australian Dollar (AUD)

Published: Friday, 11 September 2015 17:00 BST - Written by John Cameron

STORY LINK FTSE Mining Shares Suggest that Pound Sterling (GBP) has Peaked against Australian Dollar (AUD)

Pound Close to Best Rates against Australian Dollar, New Zealand Dollar Exchange Rates this Week

The Pound Sterling (currency : GBP) has enjoyed strong gains against both the Australian Dollar (currency : AUD) and New Zealand Dollar (currency : NZD) during the middle part of this week’s session.

The resultant move saw the GBP AUD exchange rate spike to as high as 2.2109 – within 2.5c of its August peak. The high of last month represented the pair’s highest trading level since March 2009. However, some analysts suggest that the pair’s failure to break to a fresh 6 ½ year high when it near-term peaked earlier this week represents a significant failure swing and that, from a technical perspective, the pair has now topped out.

Commodity Prices Dictate Currency Market Movement for AUD, NZD Conversion Rates

The Australian economy, more than almost any other, remains dependent on the export of raw materials, and in particular metals. The fortunes of the Australian Dollar are therefore considered to be inextricably linked with the performance of the London Stock Exchange’s mining shares. Because of their status as PLCs, these companies are beholden to publish daily lists of sales and purchases of their shares by their Directors, and recent activity from the people running miners including BHP Billiton (BLT : LN) , Glencore (GLEN : LN) and Rio Tinto (RIO : LN), have been instructive.

All three major mining companies have seen sizable purchases by their Directors over the past two weeks, with BHP Billiton’s Malcolm Brinded buying some GBP217,200 worth of his firm’s stock on 1st September. Paul Tellier of Rio Tinto registered a vote of confidence in his company on 27th August when he purchased £13,126 of its stock.

Share Shifts Suggest GBP/AUD May Fall, Sterling Forecast to Give up Gains

Meanwhile, Peter Grauer purchased 118,000 shares in Glencore for a slightly lesser £158,710 on 2nd September. This week’s session has seen Glencore’s share price advance by 11.0% suggesting that it may have turned a corner having been the FTSE’s worst performing stock this year. Paul Gait of Stanford C. Bernstein & Co. Suggested in a research note earlier today that, ‘it’s a positive for the stock, it degears the balance sheet, it addresses some of the core risks people have’. He went on to comment that ‘it acts as a powerful support for the commodity prices themselves.’


If Gait’s words prove to be prescient and Commodity prices are on their way up, then expect the Pound Sterling to give up a portion of its recent gains against the Australian Dollar (currency : AUD) and New Zealand Dollar (currency : NZD), potentially sending the GBP AUD and GBP NZD exchange rates both back down towards the two to one threshold.

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TAGS: Australian Dollar Forecasts Currency Predictions Pound New Forecasts