Concerns for Iron Ore prices could hurt the Australian economy in the weeks and months ahead which begs the question: Is the Pound well positioned to make further gains against the Australian Dollar? The below table provides Pound to Australian Dollar exchange rate changes for the past 30 days.
|Currency Pair||% Change||Difference on £200,000|
The mining firm Atlas Iron which has seen its shares plummet by 99.7% (from $4.26 in July 2011 to 1.3 cents) has admitted it faces an “uncertain road ahead” if iron ore prices continue to slump. February saw iron ore prices hit $90 highs not seen since September 2014 until more recent woes of oversupply saw the price tumble to just over $60 per tonne. Even more worrying news for the Australian Economy comes from a recent report published by BMI Research, finding the price of iron ore is likely to continue to plummet until at least 2021 where it could reach lows of just $46 per tonne.
This could spell future long term weakness for Australian mining companies and the AUD. An analyst at MineLife, Gavin Wendt has determined a critical operating level for most second-tier iron ore producers sits at just below $60 per tonne.
With GBP/AUD hitting fresh 7 month highs this morning I believe there are two main factors as the cause:
A combination of these has allowed GBP/AUD to strengthen significantly this week, a transfer of £250,000 could now earn you an extra AUD$13,250 when compared to this time last week.
Later this morning at 9:30am the yearly budget is announced. There are worries if the government decides to continue increasing spending further we could see Australia’s already fragile AAA S&P credit rating downgraded, giving our well-informed clients with an AUD purchase requirement the opportunity of a temporary spike in the market to act upon.
Wednesday at 1:30am we see the release of Chinese producer price and consumer price index figures. With the Chinese economy being the largest single export destination for Australian exports (33%), a release below market expectations could cause short term AUD weakness.
If you have Australian Dollars to sell for Sterling, booking your rate sooner rather than later could save you longer term. Speak with a member of our team on 01494 725353 or register your interest here so that one of our experts can contact you.
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