GBP EUR Rate Up On Cyprus Fears, GBP AUD Rate Down On RBA 'Hold' Decision

Modified: Tuesday, 5 March 2013 08:42 BST - Written by Minesh Chaudhari

STORY LINK GBP EUR Rate Up On Cyprus Fears, GBP AUD Rate Down On RBA 'Hold' Decision

Yesterday’s session threw up an interesting juxtaposition for investors holding euros – just as news broke that the tiny Baltic nation of Latvia had applied to adopt the euro, it emerged that the eurogoroup of Finance Ministers are holding meetings in Brussels aimed at providing a potential €17bn bail-out for the tiny Mediterranean state of Cyprus.

The dual developments served to highlight the long-standing schism in the eurozone – Germany, which remains the eurozone’s economic powerhouse, is apparently keen for companies and individuals holding deposits in Cyrus’s retail banks to make funds available to those in need. The new proposal, which economists have quickly labelled a ‘bail-in’ may have the opposite of teh desired effect, causing a run on Cypriot banks, which would in turn cause the small island’s banking sector to fail.

Meanwhile, Latvia has officially applied to adopt the single currency and it could be doing so as soon as next year. The market delived its own verdict on the possibility of yet another peripheral nation potentially joining the eurozone during yesterday’s session – the Pound to Euro exchange rate registered healthy gains on teh day and by the end of the European equities session was trading back above the 1.1600 leevl at 1.1606.

Meanwhile, the main event overnight came ‘down under’ in the form of the Reserve Bank of Australia’s latest policy announcement. The Australian Central Bank opted to maintain its key lending rate at 3.00%, observing that there had been some signs of improvement in the non-resource based sectors in th nation's economy. The news, coupled with better than anticipated doemstic Q4 trade numbers, also released overnight, sent the Pound to Australian Dollar Exchange Rate (currency : GBP AUD) down as low to within 2c of a new 28 year low at 1.4752.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Australian Dollar Forecasts Euro Forecasts Euro Pound Forecasts Pound Austral Forecasts