November 23, 2018 - Written by John Cameron
STORY LINK Pound to Australian Dollar Forecast: GBP/AUD Exchange Rate Rises despite Brexit Turbulence
GBP/AUD Exchange Rate Spikes as Iron Ore Price Drop Hits ‘Aussie’
The Pound Australian Dollar (GBP/AUD) exchange rate spiked on Thursday with the ‘Aussie’ being hit by a slump in iron ore prices – the pairing is currently trading at A$1.7751.
AUD was also knocked by a drop in property sales, with a fall reported to be the lowest since the early 1990s.
Meanwhile the GBP/AUD exchange rate benefited from positive Brexit news yesterday.
Prime Minister Theresa May’s visit to Brussel’s to meet the President of the European Commission (EC), Jean-Claude Juncker, presaged a positive outcome on Thursday resulting in an agreement – ‘in principle’ – over Brexit.
Pound to Australian Dollar (GBP/AUD) Exchange Rate Rises despite Continuing Brexit Fallout
Today saw a similar trajectory for the GBP/AUD exchange rate as Brexit developments remained controversial as ex-Brexit secretary, Dominic Raab, aired his criticism of the Brexit draft agreement as being ‘worse than staying in the European Union.’
The Labour MP Virendra Sharma also weighed in saying:
‘Even the prime minister’s allies think this is a bad deal. She can’t convince her party, and even the CBI have privately panned her deal.’
With the fast-approaching EU Brexit summit on Sunday, any public objections to Brexit could damage investors’ confidence in Sterling, as May’s deal comes under increasing fire from allies and opposition alike.
Australian Dollar (AUD) Stumbles as House Sales Worst since Early 90s
The Australian Dollar to Pound (AUD/GBP) exchange rate took a hit from a reported decrease in property sales, with fears that this could lead to an economic recession further dampening sentiment in the ‘Aussie’.
David Scutt, an economics correspondent for Business Insider, commented:
‘As for whether the slump in property turnover is an ominous sign for the Australian economy like it was in the early 90s, past performance is not indicative of future returns.’
The ‘Aussie’ was further hit by the fall in iron ore prices, with benchmark 62% fines dropping to $72.18 a tonne.
This followed iron ore exports from Australia’s Port Hedland suffering supply disruptions at the beginning of the month.
EU Brexit Summit and US-China Trade Tensions Likely to Determine GBP/AUD Exchange Rate Next Week
The GBP/AUD exchange rate is set to be driven by Brexit developments at the start of next week, following Sunday’s EU Brexit summit.
Sunday will also see Philip Lowe, Governor of the Reserve Bank of Australia (RBA) delivering a speech, with investors focusing on any comments he makes that could be interpreted as being hawkish.
Later in the week the risk-correlated Australian Dollar is likely to be affected by the G20 gathering in Argentina, with Chinese President Xi Jinping and US President Donald Trump set to go head-to-head over trade, meaning risk sentiment is likely to be volatile in the days ahead.
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TAGS: Pound Australian Dollar Forecasts