Pound Dollar Exchange Rates : GBP USD Drops to 7-Week Low Following Poor Uptake of German 10 Year Bonds

Published: Thursday, 24 November 2011 08:34 BST - Written by James Fuller

STORY LINK Pound Dollar Exchange Rates : GBP USD Drops to 7-Week Low Following Poor Uptake of German 10 Year Bonds

The Pound Euro exchange rate (GBP EUR) is 1.1607. The Pound Dollar exchange rate (GBP USD) is 1.5527. The Pound Australian Dollar exchange rate (GBP AUD) is 1.5950.

Yesterday’s session in the currency markets saw further bad news for investors hoping for signs of a recovery in the global economy, with telecoms giant Nokia Siemens announced that it was set to shed 17,000 jobs in an attempt to stem the losses incurred by the company in recent months. This represents almost a quarter of the troubled firm’s workforce.

Meanwhile, there was further bad news from the Far East, with the release of data which showed that China’s manufacturing output is at its lowest level for almost three years. The HSBC Purchasing Managers Index survey showed that had fallen from 51 in October, (indicating a small level of growth), to 48 this month, pointing to a contraction.

Elsewhere, the minutes of the November Bank of England monetary policy committee, released earlier today, were notable for their stark warning on the effect that the ongoing Eurozone debt crisis may have on Britain’s economy. The minutes observed that, ‘the worst risks, (of the Eurozone debt crisis), had not so far crystallised, (but) the threat of their doing so had increased’.

These words appeared all the more prescient when the latest German bond auction took place. Germany’s government had attempted to shift €6bn of 10 year debt, but investors were only willing to take on €3.6bn of the notes, hinting that market participants feel that there is a real risk of debt contagion from southern Eurozone states spreading to the single economic area’s powerhouse economy.

A ‘bad news day’ invariably means a good day for the strongly safe-haven US Dollar and yesterday was no exception. This saw the GBP USD rate trade down to 1.5494, its lowest level since 7th October.


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