GBP to AUD Exchange Rate Strengthens – AUD/USD at 3 Week Low
As markets opened on Monday morning the Pound declined across the board as a YouGov poll revealed that nationalist vote had taken the lead for the first time at 51%. As the day has progressed, however, the initial shock has subsided and Sterling has strengthened a little. Meanwhile the Australian Dollar has softened considerably as iron ore prices plummeted to a five-year low.
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The Pound Sterling to Australian Dollar exchange rate is currently trending in the region of 1.7359.
The Scottish Referendum was brought into sharper focus over the course of last week as a YouGov poll indicated that the lead that the unionists held over the nationalists fell from 22% to 6% in under a month. Sterling was also held back by a lacklustre Eurozone economy and heightened geopolitical issues.
Conversely last week was very positive for the Australian Dollar after the majority of the Australian economic data publications printed positively. The ‘Aussie’ was also boosted by the European Central Bank’s decision to further loosen their monetary policy and the growth prospects offered from their low interest rate.
The Pound Sterling to Australian Dollar exchange rate has hit a low today of 1.7212.
Monday saw a huge declination in sentiment towards Sterling after a YouGov poll indicated that the lead had changed hands from the unionists to the nationalists once undecided voters were removed. If Scotland does indeed vote for independence the Pound could be devalued by 3-5%, and so traders are pulling away from Sterling to avoid risk.
However, a different poll by Panelbase showed that the Unionists still had the lead at 52% and some investors have reacted favourably in the hope that the YouGov poll isn’t as accurate as first described. The British parliament also reacted swiftly to the severity of the closeness of the vote as Antonia Molloy, writing for The Independent, explains; ‘the news has sparked a frantic fight back from supporters of the union. Chancellor George Osborne promised that a plan of action to give more powers to Scotland would be unveiled in the next few days, detailing the timetable and process of any further devolution’.
The ‘Aussie’ has also dropped significantly on Monday after iron ore prices plummeted to a five-year low. Iron ore prices have fallen below US$84 a ton which has been attributed to an excess supply and a cooling Chinese economy. Year-on-year Chinese imports were expected to increase from the previous figure of -1.6% to 3.0%, but the actual data showed a contraction of -2.4%. Lucy Hornby, writing for the Finacial Times, wrote; ‘China’s iron ore imports dipped in August, contributing to a $10 a tonne drop over the past month in seaborne prices for the key ingredient in steel to the lowest level since October 2009’.
The Australian Dollar (AUD) eased to a three-week low against the US Dollar (USD) and eased against the Pound (GBP) after a report released by National Australia Bank showed that confidence among Australian businesses fell last month. The confidence index fell from July’s reading of 11 to 8 in August.
Data also showed that home loans in Australia rose 0.3% in July, disappointing expectations for an increase of 1.0%. June’s figure was revised to a 0.1% gain from a previously estimated 0.2% rise. The Pound meanwhile found support from a positive retail sales report. More positive data due today will also support the Pound.