Pounds to Australian Dollars Exchange Rate Today - GBP EUR Pushes Towards 9-Month High As GBP AUD Also Makes Gains

9 Dec 2011 at 8 AM - Written by Frank Davies

STORY LINK Pounds to Australian Dollars Exchange Rate Today - GBP EUR Pushes Towards 9-Month High As GBP AUD Also Makes Gains

The Pound Euro exchange rate (GBP EUR) is 1.1737. The Pound Dollar exchange rate (GBP USD) is 1.5634. The Pound Australian Dollar exchange rate (GBP AUD) is 1.5491.

In a major development overnight , marathon talks between European leaders in Brussels, lasting some ten hours, failed to yield the necessary ascent from all 27 EU member states to alter the make-up of the treaty which governs the single economic area.

France and Germany had led the push for a change to the agreement, with a view to automatically imposing stringent austerity measures on more profligate members.

British Prime Minister, David Cameron, was amongst the leaders to reject the proposed changes to the treaty, stating that he had opted to effectively ‘exercise his veto’ because it was ‘not in Britain’s interests to sign up’.

The seventeen Eurozone members, along with a few of the remaining ten EU member states, will now try to hammer out some kind off accord. However, any agreement is unlikely to carry the necessary clout to ease investor’s fears about a potential break-up of the Euro.

The market’s instant reaction to the news pointed to a high level of nervousness from investors regarding a disorderly break-up of the Eurozone, with Asian indices suffering pronounced losses during last night’s session. Hong Kong’s Hang Seng index lost over 3% of its value overnight, with Tokyo and Sydney dropping by slightly lower amounts.

Market participants’ fears over the future of the Euro were added to this morning, when leading credit ratings agency Moody’s downgraded three of Frances leading retail banks - Credit Agricole, BNP Paribas and Societe General, from Aa3 to A1. Market rumours have circulated over the past few months over the state of the balance sheets of these lenders, due to their considerable exposure to Greek and Italian government debts.

The Euro had already been under considerable selling pressure before last night’s developments, following the ECB’s decision to cut its key lending rate from 1.25% to 1.00%, which further eroded the Euro’s yield advantage against the Pound and the US Dollar. This saw the GBP EUR exchange rate make another run at last month’s 9-month high of 1.1785, during yesterday’s afternoon session. Further upside is possible for the pair during today’s session, with a break above 1.1785 sending out a highly bullish signal.

The ’risk off’ trading environment has elicited support for the safe-haven USD during early trading today, while the high-yielding AUD and NZD have leaked support.


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