Australian Dollar Advances on Rising Hopes of Mining Resurgence
Optimism about the future of Australia’s mining sector has supported the Australian Dollar today, leading to a small gain against the weaker Pound.
Although AU mines have been shaken by floods of cheap metals onto the markets, industry experts believe that the sector could be poised to turn a corner.
Rubhen Jeya, an economists at BIS Oxford Economics, has spelled out his forecasts for the mining sector;
‘The enormous investment boom is now translating into production, particularly within oil and gas, where Australia is expected to become the leading LNG exporter by 2022.
Growth in mining production will be roughly double the pace of the national economy over the next five years’.
Pound Australian Dollar Rate Declines over Fears of Brexit Deals
The Pound has declined against the Australian Dollar today, owing to continued concerns about the viability of Brexit proposals.
Last week was heavy with speculation and confirmation about Irish border deals and assurances, but these assertions have proved somewhat hollow this week.
In the spotlight, Brexit Secretary David Davis has panicked traders by implying that the UK wouldn’t firmly stick to recent plans for the Irish border.
He has since backpedalled, but doubts remains as to whether the UK government proposals for Brexit are even considered reliable at all.
AUD/GBP Exchange Rate could Improve on UK Brexit Fears
The Australian Dollar could steadily rise against the Pound over the rest of the week, depending on the tone of Brexit discussions.
Sticking with Australia for now, the AUD might be affected by Tuesday’s business and consumer confidence readings for November and December.
Forecasts are for no change in the NAB business confidence reading, but economists are predicting a -1.7% drop in Westpac’s consumer confidence score.
For the other half of the currency pairing, the GBP/AUD rate is on track to be persistently affected by Brexit negotiations, which have reached a critical juncture.
EU leaders will be holding a summit on 14th and 15th December, where one of the main subjects is how far the UK has come in Brexit talks.
If the UK gets a ‘pass’, then it is thought that negotiators will finally be allowed to start discussing post-Brexit trade in earnest.
Should the UK be judged to have underperformed, resulting in no approval of trade talks, however, then the Pound could drop sharply.
Brexit talks have already been delayed for months and such an outcome would only throw another spanner into the works before the New Year.
Recent Interbank AUD GBP Exchange Rates
At the time of writing, the Australian Dollar to Pound (AUD GBP) exchange rate was trading at 0.5630 and the Pound to Australian Dollar (AUD GBP) exchange rate was trading at 1.7756.