Foreign Exchange Rates - GBP AUD Rate Drops While EUR Comes Under Pressure

7 Apr 2011 at 10 AM - Written by John Cameron

STORY LINK Foreign Exchange Rates - GBP AUD Rate Drops While EUR Comes Under Pressure

The Pound Euro exchange rate (GBP/EUR) is 1.1433. The Pound Australian Dollar exchange rate (GBP/AUD) is 1.5587.

Market focus once again turned to Eurozone sovereign debt concerns overnight, when Portugal became the third European state to approach the European Union for a financial bailout.

Portugal’s stand-in Prime Minister, Jose Socrates, was forced to follow Greece and Ireland’s lead in seeking funding after Portugal’s failure to hit its 2010 budget deficit target.

Portugal’s actions are likely to cause selling pressure on the Euro ahead of this afternoon’s ECB rate announcement. It would be a massive surprise if the ECB decided not to raise rates, following ECB President Jean-Claude Trichet’s recent comments which described a raise as ‘a near certainty’. However, with credit swaps markets suggesting that there is a minority percentage chance of a 50 basis point hike, a raise of only 25 basis points would be a relative disappointment for some investors and could cause further downside pressure on the Euro.

The Pound suffered a mixed day on the foreign currency markets with the release of February’s UK Industrial Production figure showing that the British manufacturing base is recovering at a far slower pace than had been expected; annualised growth of 4.3% had been anticipated, but the actual number printed at only 2.4%.

However, there was better news for the UK’s real economy later in the day, when the NIESR released their unofficial estimate for Q1 GDP Growth in the UK. The figure showed an increase of 0.7% in economic activity, suggesting that the UK economy has returned to a healthier footing following 4’s contraction.

Elsewhere, overnight figures showed that unemployment in Australia is at its lowest level since the end of 2008, with a net 37,800 new jobs created last month. This release has caused the Aussie to garner some support during the Asian session and has seen the AUD/USD exchange rate trade to a new record high already today.

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