GBP Flounders Against EUR, AUD & NZD Following Weak UK Unemployment Data

Modified: Wednesday, 17 April 2013 15:16 BST - Written by Ben Hughes

STORY LINK GBP Flounders Against EUR, AUD & NZD Following Weak UK Unemployment Data

A potent cocktail of geo-political events over recent sessions have caused global appetite for risk to ebb. Political uncertainty in Italy got the ball rolling some six weeks ago when an indecisive general election triggered fears that the debt-burdened Mediterranean state might be about to ditch its austerity plan. Matters got worse, much worse, when Cyprus looked like it was hurtling head first towards an all-out bankruptcy. Softer than anticipated Chinese data in the last few days, combined with a continuation of the recent sabre-rattling from North Korea have added to the glum mood amongst equities traders.

Today’s session has seen an extension of the recent flight to safety from market participants, as concerns continue to persist that the global economy is heading for another slowdown. These fears have hit the risk-sensitive currencies harder than most, meaning the Australian and New Zealand Dollars have market underperformed, while the safe-haven US Dollar has hoovered up support. Many analysts are now suggesting that the recent ‘risk off’ trading environment may be the start of a significant correction in global commodities and equities markets. If this proves to be the case, then the GBP AUD and GBP NZD exchange rates may enjoy further upside as the year progresses.

Although the high-yielding currencies have suffered on the day, the worst performing of the major currencies has been the Pound Sterling. This morning’s Bank of England minutes came out exactly as expected, showing a 6-3 voting split against more Quantitative Easing for the UK. However, this morning’s British labour market data has hit the Pound hard. The latest data showed that the overall rate of British unemployment unexpectedly increased to 7.9% during the three months to the end of February 2013.

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