Last week saw the Australian Dollar to Pound exchange rate briefly plummet to a multi-month-low of 0.5667 before recovering to trend at the level of 0.5733 over the weekend.
Monday saw AUD GBP trend higher as investors reacted to the weekend’s news and the Pound remained weak following last week’s Bank of England (BoE) commentary.
Xi has championed the plan as the beginning of a new ‘golden age’ of globalisation amid concerns of rising protectionism in some major economies such as the US.
As a result of the excitement surrounding the ambitious plan, investors of commodities and risky trade-correlated currencies like the Australian Dollar have been showing increased interest in those assets.
Prices of iron ore, Australia’s most lucrative commodity, have also finally seen some gains thanks to the news after weeks or poor performance and a seven-month-low in prices.
Australia’s trade minister, Steven Ciobo, said there would be many opportunities for Australia’s businesses in China’s plan but maintained that decisions would be based on Australia’s national interest.
While the plan has received praise from many key global figures, it has also received vocal criticism. India has warned that the plan must heed international concerns on sovereignty and equality and must not be allowed to create ‘unsustainable debt burden for communities’.
The Bank of England (BoE) had left monetary policy frozen in its latest policy meeting and indicated that policy would remain loose even if UK inflation neared 3%.
This week will see the publication of highly influential ecostats from Australia and Britain which are likely to impact AUD GBP as market reaction to China’s plans and Bank of England news cools.
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