GBP EUR Rate On The Up Following Italian Debt Sale, GBP USD Rate Under Pressure

Published: Wednesday, 13 March 2013 15:00 BST - Written by Tim Boyer

STORY LINK GBP EUR Rate On The Up Following Italian Debt Sale, GBP USD Rate Under Pressure

The euro took a hit during this morning’s session as investors’ focus once again settled on Italy. The troubled Mediterranean nation, which is effectively rudderless following last month’s inconclusive general election result, was the subject of a damning result from the global bond market earlier today, when the latest auction of Italian Bonds saw the Italian government’s costs of borrowing sharply rise. The yield on three year Italian Bonds increased from 2.30% a month ago to 2.48% at today’s debt sale, signalling a heightened level of tension from bond market participants regarding state of Italy’s public finances.

The Pound euro exchange rate (currency : GBP EUR) enjoyed its best day for some time as a result, rising above the 1.1500 level during today’s morning session and touching 1.1530 just before the New York open.

Elsewhere, the US Advance Retail Sales data for February, published at the start of the US working day a short time ago, significantly bettered expectations to print at 1.1%. Analysts had been anticipating a showing of only 0.5%, so the encouraging shop sales number proved market-moving. The Pound Dollar exchange rate (currency : GBP USD) had a strong start to the day, touching 1.4980 earlier, but following the strong American data release the pair pulled back into the low 1.4900s once more as investors continued to increase their bets on a winding down of the US’s Quantitative Easing programme by the Fed.

Tonight’s main event comes in New Zealand when the reserve Bank of New Zealand makes its latest policy announcement. A ‘hold’ decision is expected, which would see domestic interest rates maintained at their current level of 2.50%. Any surprise cut by the RBNZ would therefore send the Pound New Zealand Dollar exchange rate (currency : GBP NZD) back up towards the mid-1.8000s once more.

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