Pound Dollar Exchange Rates - GBP/USD Moves Higher While EUR Makes Gains and AUD Loses Ground

14 Mar 2011 at 2 PM - Written by John Cameron

STORY LINK Pound Dollar Exchange Rates - GBP/USD Moves Higher While EUR Makes Gains and AUD Loses Ground

The Pound Dollar exchange rate (GBP/USD) is 1.6125. The Pound Euro exchange rate (GBP/EUR) is 1.1548.

Japanese authorities have warned of a possible meltdown after a second explosion since Saturday at the Fukushima nuclear power plant. The fuel supply to a cooling pump in one of the plant’s reactors ran out a short time ago, causing fuel rods to become exposed and experts now fear that widespread contamination will occur.

The aftermath of Friday’s devastating earthquake in Japan continues to cause volatility in the financial markets as speculators and investors amend their positions. Stock markets have not replicated their severe losses of Friday, however they are generally down across the board; the FTSE 100 has lost a fifth of a percentage point on the day whilst in the States, the benchmark S&P 500 index has lost over 0.50%.

The US Dollar made strident gains against the majors in the immediate aftermath of last Friday’s disaster as institutional investors moved quickly to shift their funds into the safe haven of the US Dollar.

However, oil prices have recovered during early trading, with the price of a barrel of Brent Crude currently fetching a full Dollar more than at the start of today’s European session, as analysts predict that the Japanese economy will return to growth in quarter 3 of 2011. Rising oil prices along with a reduction in the levels of panic in the market have caused the US Dollar to weaken significantly during today’s session. The EUR/USD rate has come close to trading at the key 1.4000 level today and the Greenback has also suffered against Sterling, weakening from its Friday low of 1.5977 to touch 1.6150 at one point today.

The Federal Reserve announces its interest rate decision for March at 1815hrs GMT today. Anything other than a hold at 0.25% would be a massive shock. The accompanying statement is likely to be typically dovish. In the absence of any other data of significance, the Dollar is likely to trend weaker against the Pound and the Euro and a test of 1.6200 on GBP/USD and 1.4000 on EUR/USD look possible.

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