The Pound Australian Dollar (GBP AUD) exchange rate recovered from its recent lows on Tuesday as some ‘Brexit’ anxiety was lifted thanks to Theresa May’s speech.
Pound Australian Dollar (GBP AUD) Rises as May’s Speech Impresses
The Pound rallied this afternoon as markets reacted positively to the Prime Minister’s speech outlining her plans for leaving the EU.
In her speech May confirmed investor fears that the UK government would be seeking to leave the single market, saying;
‘Not partial membership of the European Union, associate membership of the European Union, or anything that leaves us half-in, half-out.’
Despite this, Sterling rose as the PM said she would still push for a free trade agreement with the EU, while adding she would be willing to table a proposal for a flexible transitional deal in order to minimise disruption to both EU and UK businesses.
Traders were also upbeat about the confirmation that MP’s would be allowed to vote on the final terms of the government’s ‘Brexit’ plans.
Skyrocketing Iron Ore Prices Strengthen Australian Dollar
The Australian Dollar remains in a position of strength however thanks to an explosion in iron ore prices as they reached a new two-year high, surging 3.9% to $83.65 a tonne during the Asian trading session.
The recent jump has been caused by steel production cuts in China leading to a spike in rebar prices, with Chinese officials seeking to tackle environmental concerns as a thick cloud of smog continues to blanket much of the capital.
Despite the fact that a fall in production should cause demand for raw materials like iron to fall, prices for iron ore continue to defy logic and keep in pace with rises in steel prices.
Pound Australian Dollar Forecast: UK Employment Data Ahead
The Pound will attempt to hold onto its gains tomorrow following the release of the latest UK employment data, with figures expected to show that the unemployment rate held at 4.8% in November, its highest levels since 2005.
Meanwhile, the Australian Dollar may tumble as Westpac’s Consumer Confidence Index is expected to drop from 97.3 in January.
Looking long-term the Pound is likely to fluctuate over the next few weeks ahead of March, when Theresa May is expected to trigger Article 50 and begin two years of negotiations over ‘Brexit’.
Current Interbank Exchange Rates
At the time of writing the GBP AUD exchange rate was trending around 1.63 and the AUD GBP exchange rate was trending around 0.61.
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