Pound Sterling Australian Dollar Exchange Rate News: GBP/AUD Close to Two-Week High Following China Coal Shutdown

GBP/AUD Exchange Steadies Following Coal Ban Surge

The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate is trading in a narrow range this morning as the pairing steadies after a reported shutdown of Australia coal imports in China saw GBP/AUD skyrocket on Thursday.

At the time of writing the GBP/AUD exchange rate is virtually unchanged this morning as the pairing stabilises after surging over 1% on Thursday.

Australian Dollar (AUD) Pressured by Reports of Coal Shutdown

The Australian Dollar (AUD) has steadied this morning, as the currency recouped some ground overnight after nosediving on Thursday.

This drop in the ‘Aussie’ came on the back of shock reports that China had shutdown Australian coal imports.

According to Reuters, the northern port of Dalian has imposed a ban on all coal imports originating from Australia.

Given that China accounts for 23% of all Australian coal exports, the news understandably undermined confidence in the ‘Aussie’ for fear it could dent domestic growth.

The move also stoked fears over the state of Australian’s relationship with China, with markets appearing to be spooked by a possible rift between the two close trading partners.

However some officials cautioned against jumping to conductions, with some expressing doubts that imports had actually been ‘banned’ by China, something that has helped the Australian Dollar to recoup some ground this morning.

Speaking overnight, Reserve Bank of Australia (RBA) Governor, Philip Lowe suggested:

‘I wouldn’t jump yet to the conclusion that this is something that is directed at Australia. We have to wait and see.

‘The background is really developments in the Chinese steel industry. The authorities have been trying to contain production of steel for environmental reasons and they’ve had difficulty in doing that.’

GBP/AUD Exchange Rate Forecast: Next Week’s Brexit Vote to Deliver Fresh Volatility in Sterling?

Looking ahead to next week’s session, the Pound Australian Dollar (GBP/AUD) exchange rate, is expected to be met by fresh volatility as the House of Commons holds its latest Brexit vote on Wednesday.

The debate is likely to result in some significant swings in Sterling next week depending on how MPs vote, with GBP potentially surging if MPs are able to force Theresa May’s hand into delaying Brexit.

Outside of Brexit, the Pound may also be influenced by the release of the UK’s latest manufacturing PMI at the tail end of the week, with GBP exchange rates expected to slip if growth in the factory sector continued to slow in February.

Meanwhile the Australian Dollar could come under pressure in the first half of next week, as economists forecast Australia will have registered a trade deficit in January.

However potentially dominating the attention of AUD investors next week will be the state of US-China trade talks, with the US currently set to increases tariffs next Friday unless there is some kind of Breakthrough.

Matthew Andrews

Contact Matthew Andrews