AUD GBP Back Above 0.5300 with Energy Price Effects

AUD GBP Boosted but a Busy Week of Data Begins

The AUD GBP exchange rate rallied 0.45% on Wednesday as traders focus on the issues in the energy market. Energy providers in the UK face bankruptcy after the surge in natural gas prices in Europe. That surge is helping Australia by pushing LNG spot prices higher. The Aussie dollar was also boosted after Chinese conglomerate Evergrande struck a deal with domestic bondholders.

The AUD to GBP exchange rate is trading at 0.5315 and the UK will see PMI business activity data on Thursday, alongside the latest Bank of England interest rate meeting.

Australia could open international borders by Christmas

Australia plans to open its international border by Christmas at the latest, according to its Tourism Minister Dan Tehan.

The move would unwind one of the world’s strictest lockdowns since the pandemic began, but the nation has not been harmonious on the state border issue and a full reopening may bring tensions. Tehan said Australians will be able to travel abroad anywhere once the vaccination rate in their state reaches 80%.

“People will be able to freely travel outside Australia with no restrictions” under the national plan governing the country’s emergence from Covid-19, Tehan told news reporters. Aussies would also still be subject to rules governing the countries they intend to visit.

The move has boosted the Australian dollar with the country’s borders largely locked down since the start of the virus.

The Australian dollar versus the pound has data in the form of UK PMI business activity numbers today and that will be followed by the latest interest rate and monetary policy meeting. Strong employment and inflation numbers last week could force the BoE to reassure markets on the pace of its stimulus package removal and rate hike plans.

Hopes for Evergrande situation boosts Aussie dollar

There was a boost for the Australian dollar after the Chinese Evergrande conglomerate made a deal with local bondholders as it tries to avert a default.

An Evergrande failure would be bad news and fears over its collapse already rocked iron ore markets.

Evergrande is China’s second-largest property developer, but the world’s most indebted, and it’s in severe financial distress. Evergrande is said to have missed interest payments to two of its largest bank lenders on Monday.

Financial markets were boosted by news that Evergrande Group’s onshore property unit, Hengda Real Estate, would make a $49.5 million interest payment for its 5.8 per cent 2025 bond tomorrow.

“If there is a major slump in China’s property market, then it has a major effect on economic growth, which of course has a huge impact on global growth, and of course is bad for Australian commodities,” AMP Capital said.

BHP Group is already down 30% from its peak earlier this year as the price of iron ore has collapsed more than 60% from record highs. Iron ore is also Australia’s key export with China being the key customer and exports have kept the Australian economy out of further trouble since the virus hit.