The Australian Dollar Pound (AUD GBP) exchange rate was met by increased volatility at the start of the week as prices for iron ore stumbled following the reopening of the Chinese market.
Australian Dollar Pound (AUD GBP) Weakened by Drop in Iron Ore Prices
After stabilising close to the multiyear high struck at the beginning of the year for much of last week, prices of iron ore tumbled on Monday as Chinese investors returned from their Lunar New Year celebrations.
The drop weighed heavily on the commodity-correlated Australian Dollar as iron ore accounts for a quarter of all the nation’s exports.
This was also compounded by data released by Pilbara Ports Authority (PPA) that showed that Iron ore exports from Port Hedland saw a notable drop in January.
Business Leader Survey Pressures Pound
The Pound was also pressured yesterday by the release of a UK business survey by Ipsos Mori, with 58% of senior executives in Britain already reporting that their businesses are facing the pressures of Brexit.
The survey reported that companies are also concerned about the possibility of facing tariffs, something that is spooking investors and preventing some from committing to any long-term projects in the UK as they await clarity on the UK’s position in the single market.
AUD GBP Forecast: RBA Meeting Ahead
The AUD GBP exchange rate may rally later on Tuesday following the latest Reserve Bank of Australia (RBA) policy meeting.
While investors do not expect the Bank to alter its interest rate at today’s meeting, there is speculation that the recent uptick in the Australian economy could prompt a more hawkish outlook on future rate hikes.
Meanwhile the UK government’s Brexit bill will pass through the House of Commons this week, with Sterling sentiment likely to improve if any amendments made to the bill help to hinder Theresa May’s plans for a ‘hard Brexit’.
Current Interbank Exchange Rates
At the time of writing the AUD GBP exchange rate was trending around 0.61 and the GBP AUD exchange rate was trending around 1.63.