Pound Sterling's Gains Against Australian Dollar Could Be Short-Lived, GBP USD Exchange Rate Drops And GBP EUR Rate Edges Higher

Modified: Monday, 25 June 2012 16:31 BST - Written by John Cameron

STORY LINK Pound Sterling's Gains Against Australian Dollar Could Be Short-Lived, GBP USD Exchange Rate Drops And GBP EUR Rate Edges Higher

A very quiet day for global data releases has not stopped there being considerable volatility in the currency markets on the day. As usual, the eurozone hogged the limelight, with the news that debt-addled Spain has formally approached the other sixteen eurozone states to request a formal bail-out. The development has seen the single currency lose more ground against the other majors, taking the GBP EUR exchange rate as high as 1.2469 on the session.

Elsewhere, the safe-haven US Dollar has been the best-performing of the major currencies on the day, with the notable exception of the Japanese Yen. Positivity for the Greenback was driven by fears that the eurozone’s debt crisis is about to escalate as the region’s latest emergency summit, penned in for later this week, looms large in the minds of global investors. The GBP USD rate has held in the 1.55s all day and there appears a real prospect that Cable may experience further downside as the week progresses.

There was little to report on the day for Sterling, however this could change tomorrow morning, with the release of the latest UK Public Sector Net Borrowing figures, which are likely to serve as a sharp reminder to market participants that Britain is a long way away from balancing her books. It would be no surprise if the Pound lost ground in the wake of this release.

Elsewhere, the risk sensitive Australian Dollar has been one of today’s losers as investors scale back on risk due to fears over Europe. This has taken the GBP AUD exchange rate back up into the 1.5600s, albeit briefly. However, with another rate cut by the Reserve Bank of Australia appearing less likely following the release of last week’s minutes, the move against the Aussie may not have legs.

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