Pound Dollar rate: Investor Sentiment drives risk on trading GBP USD rallies, High Yielders AUD NZD and ZAR Make Extended Gains

Modified: Friday, 28 October 2011 09:48 BST - Written by John Cameron

STORY LINK Pound Dollar rate: Investor Sentiment drives risk on trading GBP USD rallies, High Yielders AUD NZD and ZAR Make Extended Gains

The Pound Euro exchange rate (GBP EUR) is 1.1353. The Pound Dollar exchange rate (GBP USD) is 1.6090. The Pound Australian Dollar exchange rate (GBP AUD) is 1.5066.

Today’s session coming into the end of the week is likely to represent a continuation of trend from this past week. There is a wave of positive sentiment being ridden by traders after news of the European sovereign debt deal. The Euro hit a seven month high against the dollar of 1.4247 yesterday yet retraced overnight as investors started to take profit ahead of the weekend.

The sovereign debt deal represents a huge sigh of relief in the markets with a €110Bn agreement for recapitalisation of Greek banks and a write off of 50% of private investor’s losses on Greek debt holdings.

Moving forward it will be very interesting to see whether the debt package is sustainable and whether this wave of positive sentiment continues. We would expect the positive sentiment to falter moving into next week as markets look at how the package will be implemented and evaluate exactly what will change. Fundamentally there is still a very worrying financial situation in the Eurozone. It is likely that other suffering Eurozone countries will need further assistance in the future and the precedent has now been set.

Yesterday’s news that the US economy grew by 2.5% ‘annualised rate’, helped the Euro gain and the USD weaken aiding traders trading the current risk on market.

Today sees the release of US personal income and spending data for the month of September, we also have the first estimate of Belgian Q3 GDP.

The Pound is up in trade this morning benefiting from a rally in risk on assets, it is likely that we will see a relief rally in the Pound today after some significant selling pressure earlier in the week.

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