The Pound has declined against the Australian Dollar today, following the news that no amendments have yet been made to the Parliamentary Article 50 bill.
The Australian Dollar’s latest gains are due to rising iron ore prices, but the AUD could also benefit from a stronger China in the future.
Pound Australian Dollar Exchange Rate Drops after Iron Ore Price Jump
The Pound has recently dipped against the Australian Dollar, owing to a spike in iron ore prices raising AUD demand.
The latest major UK news has been that the Article 50 bill to allow the Government to start the Brexit process has met with little opposition in the House of Commons, having had a number of amendments against it blocked by majority votes.
Australian news has focused on iron ore costs, which have climbed notably after a previous period of decline.
Pound Losses Forecast if Parliament Votes for ‘No Deal’ on Brexit Terms
While the precise date for the crucial Parliamentary vote on the Government’s Brexit stance is not yet known, one of the outcomes to the vote could shatter demand for the Pound and trigger a slide in the GBP AUD exchange rate.
This comes after Minister of State at the Department for Exiting the European Union David Jones’ statement that if Parliamentary voters reject the final proposed Brexit deal, then the UK will leave the EU anyway under worse conditions.
The general assumption is that this would lead to the UK being put under World Trade Organisation rules, which are considered inferior to single market access.
In the run-up to the vote, any signs that MPs might be leaning towards a ‘no deal’ decision are likely to weaken the Pound greatly, as is an actual rejection of any EU offers in finality.
Australian Dollar Forecast to Fall if Chinese Economy Deteriorates
Outside of any direct Australian news, one factor that may continue to have a strong influence over Australian Dollar demand will be the Chinese economy.
As Australia’s biggest trading partner, China has been drawn closer still to Australia after the US withdrawal from the Trans-Pacific Partnership (TPP) trade deal. While it remains to be seen whether China will step in to fill the US’s place in the deal, the Australian Dollar’s value is still at least partly dependent on a strong Chinese economy.
With US President Donald Trump displaying an increasingly protectionist rhetoric about international trade and Chinese President Xi Jinping expressing opposite sentiments, it could well be that China will turn into the dominant trading nation instead of the US.
This would likely be to Australia’s benefit, with an expanding China triggering a knock-on appreciation for the Australian Dollar due to rising hopes of improved trade links between the two countries.
Recent Interbank GBP AUD Exchange Rates
At the time of writing, the Pound Australian Dollar (GBP AUD) exchange rate was trending in the region of 1.63 and the Australian Dollar Pound (AUD GBP) exchange rate was trending in the region of 0.61.
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