Foreign Exchange Insight : Gloomy Reserve Bank of Australia Minutes Send GBP CHF and GBP USD Rates Lower

Published: Tuesday, 21 June 2011 06:04 BST - Written by John Cameron

STORY LINK Foreign Exchange Insight : Gloomy Reserve Bank of Australia Minutes Send GBP CHF and GBP USD Rates Lower

The Pound Euro exchange rate (GBP EUR) is 1.1304. The Pound Dollar exchange rate (GBP USD) is 1.6215. The Pound Australian Dollar exchange rate (GBP AUD) is 1.5345.

The Reserve Bank of Australia’s minutes of this month’s Monetary Policy meeting, released during last night’s Asian session, painted a gloomy picture of the state of the global economy.

The RBA minutes described risks to global economic recovery as ‘more prominent’ over the last month and on the domestic front, observed that softer economic data meant that thoughts of an Australian interest rate rise could be postponed for the time being. The minutes went on to state that the Eurozone’s sovereign debt crisis was a major concern.

The pessimistic tone of the RBA’s minutes has led to immediate support for the Swiss Franc and US Dollar and there is potential fro the GBP CHF and GBP USD rates to drop further when the European session opens.

Elsewhere, Greece’s new cabinet, which was put in place by Prime Minister George Papandreou at the end of last week, faces a vote of confidence in the Greek parliament later today, as Papandreou seeks a mandate to push through his proposed financial reforms. A vote of no-confidence would spell the end for Papandreou’s proposed austerity package, leading the EU-IMF to withhold the final €12bn tranche of Greece’s original bail-out package and making it nearly impossible for Greece to meet its current debt commitments.

Meanwhile, lower-than-anticipated German Producer Price inflation figures, released yesterday morning, have dampened investors’ expectations for a near-term ECB interest rate hike. The figure, a leading indicator of consumer price increases, showed that the input prices paid by German manufacturers rose by 6.1% in May, versus April’s rise of 6.4%. A failure by the ECB to raise rates at its July meeting would cause considerable selling pressure on the single currency, following ECB President Jean-Claude Trichet’s hawkish comments earlier this month.


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