The Pound has been in low demand during trading today, having been softened against the Australian Dollar by recent fears about a future UK-US trading relationship upset.
The Australian Dollar’s gains have stemmed from astonishing growth in the cost of iron ore, which has turned the AUD bullish at the start of the week.
During the turbulence of last week, the Pound climbed against the then-flagging Australian Dollar, gaining around five cents.
Pound Sterling News: PM’s Trade Ambitions Questioned as Markets Contemplate US Protectionism
The Pound has managed fallen slightly against the Australian Dollar during trading today, though the current rate is still a high not seen since the start of October.
The latest domestic news has been that Prime Minister Theresa May has been attempting to woo Indian officials to trade with the UK in the future. Despite deals worth billions being signed, however, the concern has been voiced that the UK may become undesirable to India after it leaves the EU.
Further softness for GBP has been caused by the fear that an apparently protectionist Trump administration may not wish to establish a strong US-UK trade link, given that outside trading has been associated with US job losses by the President-Elect.
Australian Dollar Update: Historic Highs for Iron Ore Keep AUD in High Demand
As with the previous Monday, the Australian Dollar has been sent soaring against its peers today by iron ore prices, which have risen by 83.2% over the course of 2016.
This is more than a doubling of the record lows seen almost a year ago, and has been partly attributed to underlying fears of a Trump presidency driving up demand for some of the world’s commodities.
Additionally, Chinese data has recently shown October’s industrial production remained at a steady 6.1%, which has further illustrated high demand for the Australian commodity.
This Week’s GBP/AUD Exchange Rate Forecast
This week, Pound Sterling Australian Dollar exchange rate movement may occur as a result of UK inflation rate, jobs and retail sales figures, as well as Reserve Bank of Australia (RBA) minutes and unemployment rate figures.
On the UK’s side, Tuesday is expected to see an inflation rate rise on the year from 1% to 1.1%, as well as a monthly reprint at 0.2%.
Problematically, Wednesday’s September average earnings including bonuses are forecast to fall from 2.3% to 2.2%, which could weaken the Pound; consumers will struggle if wage growth does not keep up with the pace of inflation.
Also out on Wednesday will be the September UK unemployment rate, which is forecast to rise from 4.9% to 5%.
Closing off the week’s UK news will be Thursday’s October retail sales results, which are forecast to rise on the month and the year.
From Australia, any hawkishness in Tuesday’s RBA minutes may bolster demand for the Australian Dollar, while an unexpected drop in the current October unemployment rate may also induce gains for the AUD.