Pound Euro Exchange Rates - GBP/USD Tumbles While EUR and AUD Hold Steady

11 Mar 2011 at 2 PM - Written by John Cameron

STORY LINK Pound Euro Exchange Rates - GBP/USD Tumbles While EUR and AUD Hold Steady

The Pound Dollar exchange rate (GBP/USD) is 1.6010. The Pound Euro exchange rate (GBP/EUR) is 1.1615.

Sterling has lost a massive amount of ground against the US Dollar over the last two trading sessions. Having traded at close to 1.6200 during yesterday’s European morning session, GBP/USD has now done a significant amount of work below the key 1.6000 level on the day today. A close below this key level would send out a highly bearish signal for the pair.

Equities markets have continued their downward march today as market rumours circulate that today’s Eurozone Emergency Debt Summit will fail to provide an agreement on the future make-up of the European sovereign debt bail-out fund. The summit, which was pencilled in as a major event, has now been shoe-horned into a short afternoon session at today’s leaders’ meeting, with the majority of the day being taken up by discussions on the crisis in Libya.

Negotiations on the status of the fund are now likely to be deferred until the next EU summit at the end of the month. The markets abhor a vacuum and this lack of clear policy direction from EU leaders is likely to cause further downside for the Euro over the next two weeks, particularly if Portuguese, Greek, Irish, Spanish and Italian debt spreads continue to widen.

Meanwhile, in the UK, today’s Factory Gate Price data showed that output prices are rising at an annualised rate of over 5%. This will provide further food for thought for BoE MPC members, who so far have resisted calls from economists to raise interest rates.

This afternoon’s US Retail Sales figure for February came in on-expectation, showing an increase of 1%. However, it seems unlikely that any data release will provide stimulus for the Federal Reserve to tighten US monetary policy.

TAGS: American Dollar Forecasts Euro Forecasts Pound Dollar Forecasts Pound Euro Forecasts Pound Sterling Forecasts