AUD GBP Looking for Catalyst at Key Level

AUD GBP Looking for Catalyst at Key Level

The AUDGBP exchange rate closed the week higher at 0.5425 after the reopening of Australia’s two most populous cities. The pound sterling has been supported by rate hike talk but is now being weighed by rising coronavirus gloom. Wednesday will be the important day this week for economic data as Australian inflation is released and the UK sees its Autumn budget.

The AUD to GBP exchange rate is looking for a catalyst to hold the gains above 0.5400.

Low carbon plans spur m&a boost in Australia

A sweeping consolidation wave has boosted Australia’s energy sector as leading players such as BHP and Santos adapt their business plans to suit green initiatives.

However, analysts are worried that takeover battles are raising corporate valuations.

Australia registered 1,180 mergers and acquisitions in January-to-September, according to financial company Refinitiv. The figure is 16% higher than the same period in 2019 and is the highest of any nine-month period in a decade.

Companies are “preparing themselves for the energy transition,” said Andrew Harwood, research director at Wood Mackenzie.

Companies are looking to generate “enough cash flow to satisfy shareholders, but also to be able to accelerate their investments in sort of low carbon and alternative sources of energy,” he added.

BHP Group is one example of this trend and CEO Mike Henry is bullish about the company’s oil and gas portfolio. “We see there being really strong value and returns to be created for shareholders over the next decade and likely beyond that,” he said.

Leaked memo hints at UK plan B coming into effect

The UK government are back to their confusing best as an easing of travel rules has aligned with a leaked memo suggesting the plan B virus strategy is getting closer.

Fully vaccinated travellers arriving in England from a non-red list country can now use lateral flow tests rather than the PCR test.

However, the UK is seeing calls from opposition parties to start the plan B restrictions. The Liberal Democrats even called for a new furlough program only a few weeks after the government’s most expensive pandemic support program ended.

“This Conservative government’s bungling and inaction make it look increasingly likely Covid restrictions will have to be reintroduced. If jobs are to be protected, the chancellor must ensure there is also a plan B for furlough,” Christine Jardine said.

“This new wave of furlough needs to be flexible, provide support whenever businesses need it, and be targeted at the industries that will be hit hardest. Without this, many sectors of our economy could grind to a halt, putting jobs at risk and limiting our ability to invest in skills and other priorities.”

UK Chancellor Rishi Sunak said: “We’re monitoring everything. But at the moment the data does not suggest that we should immediately be moving to plan B”.

Mr Sunak will deliver his Autumn budget on Wednesday in a potentially volatile day for the pound sterling.