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GBP/AUD rate at publication: 1.7900Bank transfer rates (indicative guide): 1.7280-1.7407Money transfer specialist rates (indicative): 1.7780More information on securing specialist rates, hereSet up an exchange rate alert, hereAustralian Dollar resilience was on show over the past 24 hours as surging iron ore prices provided a protective barrier against news that China was walking out of a key trade agreement over a spat concerning a northern port.

The Australian Dollar advanced on the Pound and U.S. Dollar as iron ore prices hit fresh all-time highs, driven by ongoing demand for the raw material amidst signs of a burgeoning global economic recovery.

"The upward march of commodities showed no sign of abating yesterday, with copper prices up another +1.76% to reach a fresh high for the decade, and spot iron ore prices rose above $200/ton for the first time ever," says Jim Reid, an analyst with Deutsche Bank. "My summer building project at my house looks like it is getting more expensive by the day."

The Australian Dollar had however been a laggard earlier on Thursday in a knee-jerk reaction to news China would suspend a key trade accord with Australia.

China - Australia's main export market - said on Thursday it had suspended an economic agreement with Australia; media reported the move is a tit-for-tat response to Australia's apparent scrapping of a Belt and Road infrastructure pact.

But selling the Australian Dollar was always going to be a hard task in light of the ongoing commodities boom.

"You can’t make money selling the commodity currencies until commodity prices turn. Iron ore and copper are tickling multi-year highs," says Brent Donnelly, Senior FX Dealer at HSBC in New York.

Above: Iron ore prices continue to surge

The Australian Dollar is considered a commodity currency owing to the support it derives from the sale of Australian raw materials.

Australia's trade balance has improved notably through the latter part of 2020 and early 2021 courtesy of the high prices iron and other commodity exports are commanding on global markets.

"FX markets have entered May split down the middle. Outperforming are the commodity currencies enjoying the global recovery cycle and backed by central banks considering tighter policy," says Chris Turner, Global Head of Markets at ING Bank N.V.

The Australian Dollar will therefore only really likely become susceptible to worsening relations with China when the commodity cycle turns lower.

Indeed, some Australian Dollar bulls will feel deflated that the Australian Dollar is not doing better despite the rally in commodity prices.

This reaffirms that commodity prices are proving supportive, but there are certainly other headwinds at play that are depriving the Aussie unit of stellar valuations.

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The previous two weeks saw a Pound-to-Australian Dollar (GBP/AUD) exchange rate advance of 0.18 and 0.03%.

This is a pair that is truly struggling for direction.

The U.S. Dollar-to-Australian Dollar exchange rate meanwhile continues to consolidate in a band defined by 0.77 at the bottom and 0.78 at the top.

There appears very little appetite at present to break the range in a foreign exchange market that is broadly looking for a new big theme.