The Pound has been weak against the Australian Dollar during trading today, with the pressures of the upcoming Brexit process weighing on Sterling demand.
Good news on the Australian front has focused on commodity prices, though the future could hold a sting in the tail for Australian Dollar investors hoping for continually high iron ore costs.
GBP AUD Losses Stem from Brexit Talks with UK Devolved Leaders
The Pound Australian Dollar exchange rate has been poor so far today, on account of talks between Prime Minister Theresa May and the heads of the devolved nations in Cardiff.
The meeting of minds has highlighted one of the key issues about the Brexit process, which is the fact that deep internal divisions exist between England and Scotland as well as Wales on the subject of single market access.
Theresa May notably confirmed that the UK would be leaving the EU single market as part of Brexit, but Scottish First Minister Nicola Sturgeon has not taken this news lightly. Instead, Sturgeon has sought to keep Scotland in the UK but also in the single market, a potentially impossible task given the already-complex nature of proceedings.
Notable Australian news has been that, at the start of the Chinese Lunar New Year, a time when the nation takes a week-long holiday, iron ore demand was high; this bodes well for factory demand at the start of February when the holiday ends.
Pound Sterling Losses Possible if Bank of England Adopts Dovish Outlook on Brexit
Looking ahead for sources of Pound Sterling movement, the next major direct news will be the Bank of England (BoE) interest rate decision on February 2nd.
The BoE is expected to leave interest rates on hold at 0.25%, but any comments from policymakers in the aftermath could move Sterling depending on the tone of officials.
Looking past this event, future BoE decisions and remarks in 2017 could well weaken the Pound Australian Dollar exchange rate, if it looks like the Brexit negotiations will leave the UK economy worse-off.
Australian Dollar Forecast to Rally if Iron Ore Demand Remains High after Lunar New Year
The next event set to have a strong influence on the Australian Dollar will be the close of the Chinese New Year in early February, at which point Chinese steelmakers will get back to business.
If this resumption of activity is accompanied by a significant rise in iron ore demand, then the Australian Dollar could well rally strongly due to signs that the national mining and exporting industry is still in a stable state.
Recent Interbank GBP AUD Exchange Rates
At the time of writing, the Pound Australian Dollar (GBP AUD) exchange rate was trending in the region of 1.66 and the Australian Dollar Pound (AUD GBP) exchange rate was trending in the region of 0.60.
Comments are closed.