Foreign Exchange Report : GBP EUR Rate Stays Low In Spite of S&P’s Spanish Debt Downgrade, While GBP AUD Rate Falls Further

17 Oct 2011 at 9 AM - Written by John Cameron

STORY LINK Foreign Exchange Report : GBP EUR Rate Stays Low In Spite of S&P’s Spanish Debt Downgrade, While GBP AUD Rate Falls Further

The Pound Euro exchange rate (GBP EUR) is 1.1390. The Pound Dollar exchange rate (GBP USD) is 1.5826. The Pound Australian Dollar exchange rate (GBP AUD) is 1.5304.

Last week ended with a better-than-anticipated US data release for the second week in succession, with Friday’s US Retail Sales data for September, (the week before saw the release of encouraging US labour market figures.

Analysts had expected the US shop sales figures for last month to show an increase of 0.7%, but the numbers outstripped expectations to print at 1.1%, their biggest monthly improvement since March of this year. August’s counterpart figure showed minimal growth of 0.3% in US Retail Sales, causing widespread optimism that US consumers may be minded to spend the US out of recession.

The positive US data saw both European and North American equities markets close on Friday in positive territory, pointing to a pick up in global appetite for risk. This move was continued into last night’s Asian session, with the Tokyo and Hong Kong indices both registering gains of between 1.5% and 2% on the session.

The improvement in global appetite for risk helped the high-yielding currencies to continue their positive performance of the past two weeks, with the Australian Dollar faring particularly well. This has took the GBP AUD rate briefly back below 1.5300 late on Friday – it was trading in the mid-163s as recently as 4th October.

The up-shift in investor sentiment also served to take the GBP USD rate to a 4-week high of 1.5852 as institutional investors moved their funds out of the safe haven of the US T-Bill.

Elsewhere, leading ratings agency S&P has followed the lead set by Fitch’s last week and cut Spain’s credit rating from AA to AA- this morning, citing fears over the troubled Iberian state’s anaemic levels of economic growth and concerns over levels of private debts as its primary reasons. So far, market participants appear unphased by S&P’s actions and the Euro is holding on to the considerable gains that it has made against the other majors over the past week.


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