The Australian Dollar Pound (AUD GBP) exchange rate briefly struck a new weekly high on Tuesday following a sudden surge in iron ore futures.
Australian Dollar (AUD) Lifted by Iron Ore Prices
The Australian Dollar began to trend higher against the Pound late on Tuesday following a rise is risk appetite and a surge in commodity markets.
After trending lower for much of yesterday’s session Chinese iron ore futures suddenly leapt at the end of the Asian session.
The Dalian Commodities Exchange saw iron ore futures jump 4.87% towards the end of the day, bringing its totally gains since striking a multi-month low earlier in June to over 10% and reaching its highest value since the end of May.
The jump has led to speculation that prices for Australia’s largest export will continue to rally over the coming week, having already posted gains in eight of the previous nine sessions.
The jump in iron ore futures correlated with a similar surge in steel futures, with Chinese rebar prices strengthening following the government announcement that it would be implementing production cuts across the sector.
However the Pound was able to recoup the majority of its losses overnight on Tuesday, with AUD GBP stabilising close to this week’s starting levels as the Bank of England (BoE) released its latest financial stability report.
The main take away from the report was that the BoE wants the UK financial sector to prepare for a possible downturn as consumer credit reaches its highest levels since the financial crisis, with banks being told to ensure they have £11bn of extra capital to be kept in reserve.
While not greatly impacting currency market, the banks apparent confidence in the UK economic outlook appeared to reassure some of the more nervous investors.
AUD GBP Forecast: Australian and UK Housing Data Ahead
Australia will release its latest home sales data on Thursday, with the AUD GBP exchange rate possibility tumbling if the HIA reports that sales have begun to slow.
Meanwhile the UK will release its own housing data in the second half of the week with analysts expecting the data to paint a mixed picture.
While house prices are expected to have stabilised in June after falling last month economists forecast that mortgage approval will have fallen slightly in May, possibly prompt fears over the state of the UK housing market.
Current Interbank Exchange Rates
At the time of writing the AUD GBP exchange rate was trending around 0.5948 and the GBP AUD exchange rate was trending around 1.16806.