Pounds to Australian Dollar Exchange Rate Today - GBP EUR Hits New 16-Month High, While USD is Well Bid

January 5, 2012 - Written by David Woodsmith

STORY LINK Pounds to Australian Dollar Exchange Rate Today - GBP EUR Hits New 16-Month High, While USD is Well Bid

The Pound Euro exchange rate (GBP EUR) is 1.2075. The Pound Dollar exchange rate (GBP USD) is 1.5594. The Pound Australian Dollar exchange rate (GBP AUD) is 1.5109.

The Euro came under significant selling pressure in the currency market yesterday, sending the GBP EUR exchange rate to a fresh 16-month high of 1.2100 on the nose, late yesterday. Negative sentiment towards Europe’s single currency saw the EUR USD exchange rate trade to within half a cent of last month’s 15-month low of 1.2858.

There was little in the way of negative data releases coming out of the Eurozone during yesterday’s session. The European data releases that did take place were tier two in nature, with the Eurozone-wide PMI Construction and Services sector surveys for December providing the major interest for investors. Both of these sentiment indices significantly bettered analysts’ expectations, while the Eurozone CPI inflation estimate for December showed at an annualised 2.8%, as had been widely anticipated.

Yesterday’s session was also marked by successful bond auctions from Germany and Portugal. Demand for German bonds ebbed in the run-up to Christmas, as investors aired their concerns that the Eurozone’s primary economic power might be dangerously exposed to contagion from the region’s ongoing debt crisis. However, both Portugal and Germany managed to shift a significant volume of their respective bonds at lower yields than at their previous bond sales.

Considering the fundamentals, the move against the Euro appears unjustified and may be attributable to technical trading from institutional investors. Given this fact, there is considerable scope for downside for the GBP EUR exchange rate during today’s session as market participants ‘take profit’.

Meanwhile, it was a case of two steps forward, one step back, for global equities markets yesterday. Following a strong performance in the first session of the New Year on Tuesday, leading share indices gave up a significant portion of those gains, as the market corrected.

This saw the US Dollar benefit as investors sought out a safe haven for their funds. This saw the GBP USD rate trade back below the 1.5600 for a large part of the day. Further downside is possible for this pair if tomorrow’s US Non-Farm Payroll figure for December points to a softening in the American labour market.


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