Pound Dollar GBP USD Rate Surges as Global Central Banks Announce Concerted Intervention in the Currency Markets, GBP AUD and GBP NZD Rates Plummet

1 Dec 2011 at 5 AM - Written by David Woodsmith

STORY LINK Pound Dollar GBP USD Rate Surges as Global Central Banks Announce Concerted Intervention in the Currency Markets, GBP AUD and GBP NZD Rates Plummet

The Pound Euro exchange rate (GBP EUR) is 1.1660. The Pound Dollar exchange rate (GBP USD) is 1.5701. The Pound Australian Dollar exchange rate (GBP AUD) is 1.5328.

Yesterday’s session in the currency markets saw a massive surge forward in global appetite for risk, favouring the high-yielding currencies and causing institutional investors to shift out of the safe haven of the US Dollar.

The pick-up in risk appetite came as a reaction to the news that six of the world’s leading central banks are set to act in unison in order to make it cheaper for financial institutions to purchase US Dollars on the wholesale market.

The aim of the action is to make credit more accessible for small-to-medium businesses and private individuals on a global scale. The concerted action by the US Federal Reserve, the European Central Bank, the Bank of England, the Bank of Japan, the Bank of Canada and the Swiss Central Bank, is set to commence next Monday.

World equities markets were massively encouraged by the announcement, seeing the benchmark S&P 500 and London’s FTSE 100 indices close up by over 3.6% on the day. Major indices in the Eurozone made even greater gains, with Frankfurt’s Dax and Paris’s Cac 40 both up by nearly 5% on the session. Shares in retails banks were particularly well-supported.

The risk-on trading environment saw the AUD, NZD and ZAR surge as market participants rapidly regained their appetite for riskier assets. By the end of yesterday’s European session, both the GBP AUD and GBP NZD rates had tumbled by over 2%.

Conversely, the Greenback was friendless in the market, causing the GBP USD exchange rate to shift from the 1.55s in early trading yesterday, to come close to 1.5800 late on in the European session. Further gains are likely today for this pair if investors continue to shun safety.


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