This report will examine the factors that could affect exchange rates in the coming months to help you stay informed if you need to make a currency transfer. The table below shows the difference you would have received when buying £200,000 at the high compared to the low for the past 30 days.

Currency Pair% ChangeDifference on £200,000
GBPAUD4.1%AUD $14,250
Interest rates stay on hold for the 20th month

The impact of iron ore on the Australian Dollar

The Australian Dollar has strengthened towards the end of the year vs the Pound after flirting close to 1.80 on a number of occasions against the Pound. In the last month however the Aussie Dollar has fought back against the Pound by over 4% or the difference of over AUD $14,000 on a currency transfer of £200,000.00 highlighting the importance of keeping your account manager updated with your requirements.

During the final month of the year we have seen huge movements on the value of iron ore. Australia produces over 660 million tonnes of this raw material each year and amounts to approximately $75 billion for the Australian economy so any movements can cause fluctuations in the value of GBPAUD exchange rates.

Over the last fortnight the value of iron ore has risen by 14% and this has helped to strengthen the Australian Dollar against the Pound.

The sale of iron ore also results in over $10bn in taxes and royalties to the government down under. Indeed, during 2014 according to the RBA household incomes were 13% higher owing to the mining industry with people benefiting from the employment as well as holding shares in the mining industry.

NDMC, which is the largest iron ore producer in Australia has seen demand from China increase recently owing to a crack down in pollution in China. Steels mills are buying more of the product owing to the quality compared to what is available elsewhere.

On Wednesday Australia releases its latest Commodity Index, which measures the value of commodity prices in Australia and I think this will strengthen the Australian Dollar further against Sterling if the data supports the recent climb in the value of iron ore.

We end the week with Australian Import and Export data on Friday as well as Trade Balance figures and with such as strong end to the year for the Australian Dollar I expect GBPAUD rates to drop towards the end of the week if the news is positive.

For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me here.

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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.