The Pound Australian Dollar exchange rate has recently been unsettled by signs of unrest among UK devolved nations about Brexit, while AUD GBP has gained on high iron ore prices.
Pound Exchange Rates Decline on Brexit Fears, AUD Rallies on Iron Ore Prices
During Monday’s European trading session, the Pound was a mixed bet against peers, with fresh concerns about how Brexit might play out only further destabilising GBP.
The latest news on the situation concerned Prime Minister Theresa May, who met with devolved nation leaders such as Nicola Sturgeon to discuss how Brexit negotiations should be handled.
While such a meeting was meant to represent a cooperative spirit, it appears those involved were not impressed, with Sturgeon stating that;
‘I got a strong sense [that] the UK government doesn’t yet know what its position is’.
Additional UK economic headwinds came from Microsoft, which hiked prices on some UK services and products by 22% due to the fall in Pound exchange rates post-Brexit; this is being seen as some as a bellwether for future cost increases in the UK.
For the Australian Dollar, the first day of the week was a good one, with AUD rising across the board on the news that iron ore prices remained at a 6-week high. This positive news was partly caused by fears that recent diminished production from Australia’s miners might indicate a future shortage of the resource.
Elsewhere, New South Wales (NSW) was shown by CommSec to still be the best economically performing Australian region.
Pound Sterling Forecast to Drop if ‘Hard Brexit’ Outcome Seems Likely
These are still early days in the potentially two plus years of long negotiations that will see the UK leave the EU, but there are still forecastable developments that are set to shift the Pound.
Notably, before Article 50 is triggered early next year, the Pound Australian Dollar exchange rate is likely to slide if it looks like a ‘Hard Brexit’ will be the objective of post-trigger negotiations.
This kind of outcome is expected to forfeit single market access for greater immigration controls, and could cause radical Pound exchange rate volatility if it looks like a quick and painful separation from the EU is on the cards for the UK.
Australian Dollar Pound Exchange Rate Shifts Linked to Future Iron Ore Prices
For Australian Dollar exchange rate movements, future swings are likely to be caused by the mining sector, where further signs that national supplies are running low could boost the cost of the commodity further.
While good news for the ‘Aussie’ in the short term, this could lead to long-term devaluation for the Australian Dollar, when coupled with fears that China may yet be on the edge of a slowdown that would negatively impact trade between the two nations.
Recent Interbank Exchange Rates
At the time of writing, the Pound Australian Dollar (GBP AUD) exchange rate was trending in the region of 1.60 and the Australian Dollar Pound (AUD GBP) exchange rate was trending in the region of 0.62.
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