The Australian Dollar Pound (AUD GBP) exchange rate traded narrowly on Friday as iron ore prices held close to a four-month high.
Australian Dollar (AUD) Stabilises as Iron Ore Clings to Gains
The Australian Dollar appeared to have stabilised during the Asian session on Friday as investors took stock of the recent uptick in iron ore prices.
While prices for Australia largest export actually dipped slightly yesterday, falling 0.33% to $70.20 a tonne and posting its first drop this week the fact it was still able to hold its head above the $70 helped to prevent the ‘Aussie’ from registering any losses.
The slight decline on Thursday appeared to have been largely prompted by tumbling steel prices in China, with demand having fallen in recent days as many construction sites in the country stopped work as they wait out the bad weather.
However analysts remain upbeat about the commodity’s prospects over the coming months, suggesting that strong steel demand in China will continue to buoy iron ore prices –at least in the short term.
Goldman Sachs’ commodity research team said;
‘In our view, the strength in iron ore prices is likely to continue in the short term, as strong Chinese steel and iron ore demand from infrastructure and property new starts is complemented by solid growth in global activity ex-China. Moreover, ongoing supply-side restrictions in China, together with potential new supply issues such as winter supply cuts, are likely to continue to support Chinese steel margins in the near term.’
Pound (GBP) Dips Following Fall in Consumer Confidence
Meanwhile the Pound was forced to cede some ground towards the start of the European session on Friday as data showed that household sentiment in Britain had fallen to a new twelve month low.
According to data compiled by Gfk UK economic confidence is now at its lowest levels since the vote to split from the EU, with its confidence index slumping from -10 to -12 in July, falling lower that the -11 which had been predicted by analysts.
AUD GBP Forecast: RBA Rate Decision Ahead
Looking ahead the AUD GBP exchange rate is likely to stumble at the start of next week as the Reserve Bank of Australia (RBA) gathers for its latest monetary policy meeting, with economists forecasting that the central bank will continue to signal that it will leave rates on hold for the foreseeable future.
Meanwhile the Pound may also stumble in the first half of next week if the UK’s latest Manufacturing PMI falls below target, with investors fearing that the British economy is beginning to slow down under the pressures of Brexit.
Current Exchange Rates
At the time of writing the AUD GBP exchange rate was trending around 0.6082 and the GBP AUD exchange rate was trending around 1.6438