Pound Dollar Exchange Rate Dips Following Chavez Death, GBP AUD Also Down On Australian GDP Data

Published: Wednesday, 6 March 2013 15:00 BST - Written by Toni Johnson

STORY LINK Pound Dollar Exchange Rate Dips Following Chavez Death, GBP AUD Also Down On Australian GDP Data

The newswires during this morning’s session have been buzzing with analysts’ reactions to two differing sets of Q4 Gross Domestic Product figures. Australia lead the way during overnight Asian trading, and investors holding the ‘Aussie’ liked what the official GDP data showed – economic activity in the go-ahead Antipodean economy had increased by a quarterly 0.6% in the final three months of last year. This meant that the Australian economy had expanded by a healthy annualised rate of 3.1%. The positive figure was attributed to a strong demand for the nation’s exports, highlighting the continued importance of the outward shipping of raw materials in order to maintain domestic growth.

Meanwhile, the picture was considerably less rosy in the eurozone. The latest GDP data from euroland confirmed that economic activity in the region had contracted by a seasonally-adjusted 0.6% during the final three months of 2012, in line with initial estimates. The figure provided a stark contrast to the counterpart Australian number, providing investors with a reminder that whilst Australia has prospered from the medium-term rise in global commodity prices thanks to its plentiful raw materials, the eurozone continues to suffer thanks to deep spending cuts and tax hikes in its peripheral states.

Elsewhere, the US Dollar has come in for some support so far during today’s session, sending the Pound to US Dollar exchange rate (currency : GBP USD) down to 1.5074 just before the New York open. Whilst share markets have generally continued to perform with credit today, (a move which would ordinarily harm the safe-haven Greenback), the Dollar has picked up some support thanks to a generalised uncertainty in the Americas caused by last night’s announcement that talismanic Venezuelan leader Hugo Chavez had lost his battle against cancer. A power vacuum in the oil-rich pseudo-communist state, which lies in close proximity to the US, has triggered a degree of uncertainty in the US markets, it would appear.

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