GBP AUD in a Familiar Range Despite Leadership Change

The GBP AUD exchange rate was lower last week and trades in the familiar range that has held up since early April. The resignation of Boris Johnson started a leadership race with nine Conservative ministers. Australian pension funds will still need to rely on mining firms for returns despite the pivot to renewables. 

The GBP to AUD rate trades at 1.7544 as the week commences. 

UK leadership race underway with nine runners 

Nine Conservatives are already in the race for the chance to replace Boris Johnson as Prime Minister. 

Some of the runners already announced a plan to deny Nicola Sturgeon and the SNP another referendum opportunity. Tom Tugendhat said Ms Sturgeon’s referendum plan was a “cheap political play” created to distract voters from other failures in health and education. 

One of Johnson’s final moves was to refuse the referendum request for a Section 30 order, which would have transferred powers to Holyrood, setting the stage for a vote next year. 

The pound sterling were affected by the economic policies of a new leader. Grant Shapps talked of an immediate 1p income tax cut, while Jeremy Hunt wanted to cut business corporation taxes to 15%. 

Rishi Sunak was on the receiving end of an embarrassing video clip from the former Chancellor at age 20, where he said: 

“I have friends who are aristocrats, I have friends who are upper class, I have friends who are working class … well, not working- class”. 

Among the data for the pound versus the Aussie dollar, this week is retail sales for the UK, Westpac consumer confidence and a UK GDP release. 

Australian pension funds will still need mining stocks 

Australian pension funds will still need mining company stocks for returns despite calls by members of the scheme to dump dirty energy stocks, according to a former minister. 

Nick Sherry, who was Australia’s superannuation minister from 2007-2009, said the mining sector continues to be an “appropriate” source for pension funds investment as overseas demand persists. 

Speaking at the World Pensions Council, Sherry said mining companies were important to the Australian economy, and it was not a good time to divest from these sectors. Exports of gas and coal will continue for some time to come. Mining companies are still viewed as an “appropriate place by super funds to invest”. 

Australia’s net zero commitments reflect the reality of its economy. Pension super funds need to take into account ongoing demand. Sherry asserted that the country cannot “absent” itself from industry sectors that form large parts of the economy, noting the “adjustment” to a less carbon-heavy environment was well underway in the country. 

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