Foreign Exchange Currency Insight : GBP AUD Rate Dips on RBA Minutes, Euro Makes Gains

17 May 2011 at 6 AM - Written by John Cameron

STORY LINK Foreign Exchange Currency Insight : GBP AUD Rate Dips on RBA Minutes, Euro Makes Gains

The Pound Euro exchange rate (GBP EUR) is 1.1435. The Pound Dollar exchange rate (GBP USD) is 1.6205.

The major risk event in the currency markets during last night’s Asian session came in the form of the release of the Reserve Bank of Australia’s minutes of its most recent monetary policy meeting.

On the one hand, the minutes were Australian Dollar positive, as the RBA stated that it considers ‘core inflation’ to have troughed in Australia and that a rise in interest rates would be necessary ‘at some point’.

However, the RBA also observed that there was an self-correcting element to Australia’s inflationary pressures, as the record strength of the Aussie against the US Dollar and the high propensity to save of Australian citizens were factors that would keep price pressures in check over coming months.

The RBA’s minutes went on to note the upside risk to global inflation, caused by the recent spike in the price of oil and other commodities. This suggests that policy-makers feel that Australia’s relative yield-advantage may be eroded during the second half of 2011 as other central banks move to tighten their monetary policies.

The initial reaction to the RBA’s minutes was Australian Dollar positive, with the GBP AUD exchange rate dropping from above 1.5350 back into the high 1.52s. However, the Aussie has since given up a lot of the ground it gained as analysts take a closer inspection of the minutes.

Elsewhere, comments emanating from the summit of European Finance Ministers in Brussels yesterday went some way to convincing the markets that a second bail-out for Greece could be avoided. Euro Group leader, Jean-Claude Juncker, stated that a ‘large restructuring’ of Greece’s debt was not on the agenda, but that ‘a kind of (debt) reprofiling’ had not been ruled out for Greece.

Juncker’s comments helped the Euro pare its losses of the early part of the weeks trading, as the GBP EUR exchange rate re-traced from Sunday’s opening level of 1.1516 to hit a low of 1.1401.

For other live currency exchange rates and a currency converter see the currency news website.

TAGS: American Dollar Forecasts Australian Dollar Forecasts Daily Currency Updates Euro Forecasts Pound Australian Dollar Forecasts Pound Dollar Forecasts Pound Euro Forecasts Pound Sterling Forecasts