GBP EUR Exchange Rate Nears 7 ? Month Low While GBP USD Approaches 15 ? Month High

Published: Wednesday, 19 December 2012 14:00 BST - Written by Ben Hughes

STORY LINK GBP EUR Exchange Rate Nears 7 ? Month Low While GBP USD Approaches 15 ? Month High

A dismal set of Bank of England minutes, released earlier today, has kept the lid on any gains which Sterling was able to make against the high-yielding Australian and New Zealand Dollars on the day. This has meant that, in spite of selling pressure on the ‘Aussie’ and ‘Kiwi’, GBP AUD and GBP NZD have only managed to gain around 0.5% on the session.

However, the major price action of note on the day so far has been for GBP EUR. The pair has tumbled to within a tenth of a cent of its lowest level for some 7 ½ months. Consecutive closes below October’s 1.2247, which appears a highly possible event, would send out a strongly bearish signal for the pair. The next significant level is provided by February’s 1.1756.

The euro has performed well on the day, largely thanks to the latest German IFO sentiment survey, released earlier, which showed a marked increase in expectations amongst the business community of the eurozone’s premier economy.

Elsewhere, risk has been firmly back on the menu for institutional investors, following the overnight announcement by the World Bank that is has upped its 2013 growth forecast for China. The World Bank’s economists now forecast that the activity in the world’s second largest economy will increase by a healthy 8.4% next year – this represents an upward revision of 0.3% from previous estimates.

The news, in tandem with the positive noises which are emanating from the US ‘Fiscal Cliff’ discussions, has caused a generalised shift out of safe-haven assets by market participants, causing the US Dollar to give up ground against most of the other majors and sending global share markets sharply higher. The GBP USD exchange rate has spent a significant portion of the day trading above the 1.6300 level – just a smidgen below its 15 ½ month high at 1.6310.

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