Uptick in Commodity Prices Stem AUD/GBP Losses
After plummeting by around half a cent on Wednesday the Australian Dollar Pound (AUD/GBP) exchange rate is showing some reliance today thanks to stronger commodity prices.
At the time of writing AUD/GBP is holding close to its opening levels, having stabilised after tumbling to a six-week low yesterday.
Australian Dollar (AUD) Steady as Commodity Prices Strengthen
The Australian Dollar was able to prevent further losses against the Pound on Thursday as sentiment in the ‘Aussie’ rose in line with strengthening commodity prices.
With most global commodity markets being valued in US Dollar (USD), the recent plummet in the ‘Greenback’ has helped to make them more attractive to markets, which in turn bolstered the appeal of the commodity-correlated ‘Aussie’.
However not all commodity markets were able to trend higher, with iron ore prices holding close to a four-week low as demand in China remains subdued.
Analysts at ANZ Bank said;
‘With inventories high and the Spring Festival fast approaching, physical trading has been muted.’
Pound (GBP) Bolstered by Jobs Data
Meanwhile while the Pound’s advance may have been halted during the Asian trading session Sterling remains on strong footing due to increased confidence in Brexit and the UK economy.
This was partly on the back of the UK’s latest labour figures, which saw employment rise to a new record high in November and wage growth tick higher than expected.
This in turn has led to increased speculation that the Bank of England (BoE) will move to hike interest rates again this year.
Daniel Vernazza, economist at UniCredit said;
‘Today’s labour market release, together with the likelihood of a robust Q4 GDP report due to be published on Friday, stronger global growth, and some resolution of Brexit-related uncertainty, increases the risks that the MPC already delivers another 25bp hike later this year.’
AUD/GBP Forecast: UK Growth to have Slowed in 2017?
Looking ahead the AUD/GBP exchange rate may be able to recoup some ground at the end of the week’s trading session as the UK publishes its latest GDP.
While fourth quarter growth is expected to hold at 0.4% the annualised figures could dent the Pound as economists forecast that year-on-year growth will have slid from 1.7% to 1.4%.
Meanwhile movement in the Australian Dollar is likely to continue to be driven by commodity prices on Friday as a lull in domestic data leave little else for markets to move on.