Pounds to US Dollar Exchange Rate Today - GBP EUR Tests Lower Following German GDP Data, GBP AUD and GBP NZD Rates Plummet

12 Jan 2012 at 8 AM - Written by Frank Davies

STORY LINK Pounds to US Dollar Exchange Rate Today - GBP EUR Tests Lower Following German GDP Data, GBP AUD and GBP NZD Rates Plummet

The Pound Euro exchange rate (GBP EUR) is 1.2029. The Pound Dollar exchange rate (GBP USD) is 1.5298. The Pound Australian Dollar exchange rate (GBP AUD) is 1.4844.

The spectre of Central Bank Quantitative Easing programmes loomed over the currency markets during yesterday’s session, ahead of today’s ECB and Bank of England monetary policy announcements.

However, the topic of QE was not raised by Mervyn King, nor by Mario Draghi, but instead by Charles Evans, the president of the Chicago Federal Reserve. Evans used a set piece speech to encourage the US Federal Reserve to maintain domestic interest rates at ultra-low levels, at least until the rate of unemployment in the world’s largest economy dropped from its current level of 8.5% down to 7%.

Evans went on to call for the US Central Bank to consider a further loosening of monetary policy, when he stated that a new bout of quantitative easing might be necessary to promote US economic growth and employment. Evans suggested that $600bn might be a suitable tranche of funds to allocate to such a scheme.

The Bank of England monetary policy committee is highly unlikely to alter the UK’s base rate from 0.5% later today, however, rumours abound in the markets that the nine-man committee may consider extending the £275bn already allocated to the Bank’s asset purchase scheme later today, in an attempt to steer the British economy away from a much-vaunted double-dip recession. Market participants appeared to be pricing this possibility in during yesterday afternoon’s European session, as Sterling was outperformed by all of the other 16 most actively-traded currencies.

Meanwhile, in the Eurozone, yesterday’s German GDP growth figure for 2011 showed that Europe’s powerhouse economy had grown by 3% last year. However, the German growth data was not all good news – the figures suggested that growth had slowed to a standstill in the last three months of the year and that German economic activity may even have contracted during this period. Fears that Germany is suffering adverse effects due to uncertainty regarding the Eurozone’s debt crisis held back the Euro in late trading yesterday.


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