GBP USD Exchange Rate Lower, GBP EUR Rate Steady

Published: Friday, 17 May 2013 14:00 BST - Written by John Cameron

STORY LINK GBP USD Exchange Rate Lower, GBP EUR Rate Steady

A light schedule of data releases in the global economy have made for limited price action in the currency markets so far today. Perhaps the major driver amongst the investment community at the moment is the ongoing situation in Syria, where evidence has emerged within the past few days that the ruling Assad regimes has apparently used chemical weapons against civilians. Although the international community is yet to confirm this as fact, the empirical evidence appears overwhelming. If the Western world does come to the conclusion that Syria’s government has used chemical weapons, then it would appear highly likely that there will be some form of American-led military intervention in the troubled Arab state. President Obama stated during the middle part of last year that any proof that Assad had made use of chemical weapons would represent the crossing of a ‘red line’.

The prospect of yet another prolonged military campaign for the US and her allies has caused global appetite for risk to dip on the day, triggering renewed support for the safe-haven US Dollar which has sent the Pound to US Dollar exchange rate (currency : GBP USD) back down into the lower half of the 1.5200s once more. The development has had the reverse effect on the high-yielding currencies, triggering selling pressure on the commodity-driven Australian and New Zealand Dollars which has sent the GBP AUD and GBP NZD exchange rates up through the 1.5600 and 1.8800 levels respectively.

Elsewhere, yesterday’s session brought the release of the latest inflation data from two of the world’s leading economies. Both the whole-of-eurozone and US price hike figures showed that the rate of domestic price rises is slowing. The data leaves the door open for the Federal Reserve to continue with its $85bn per month Quantitative Easing programme, and for the European Central Bank to consider further loosening its monetary policy following its decision to cut its key lending rate to a record low of 0.50% two weeks ago. The news could serve to cause the GBP EUR and GBP USD exchange rates to float upwards during coming sessions.

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