GBP EUR Exchange Rate Climbs In Spite Of Announcement Of Deeper Integration, GBP USD Also On The Up

Published: Tuesday, 26 June 2012 18:00 BST - Written by Ben Hughes

STORY LINK GBP EUR Exchange Rate Climbs In Spite Of Announcement Of Deeper Integration, GBP USD Also On The Up

Last night’s Asian session brought a major development in Japan, when the country’s parliament voted to increase the nation’s sales tax by a whopping 100%. The move was aimed at balancing the giant Asian economy’s books within three years, however market participants remain unconvinced and the Yen has failed to gain any significant ground on the day, leaving the GBP JPY exchange rate at 123.9800 as the European session drew to a close.

Elsewhere, Sterling has pushed forward on the day in spite of the release of a grim set of public sector borrowing figures for last month, which showed a much greater funding gap than analysts had been anticipating. However, the Pound made gains purely from the fact that it is not the euro. The single currency has once again suffered heavy and sustained losses on the session in spite of a set-piece speech delivered by EC Commission President Jose Manual Baroso, who announced plans for deeper European integration and the introduction of an EU treasury department, which would be able to partially dictate nation states’ budgets. The announcement did not stop the GBP EUR exchange rate breaking back above 1.2500.

Meanwhile, the US Dollar has had a neutral day, in spite of this afternoon’s weaker than anticipated US Consumer Confidence survey, which came in significantly below expectations. Ordinarily, such a disappointing tier one data release in the States would be supportive for the Greenback. However, the GBP USD exchange rate has climbed as high as 1.5650 this afternoon, suggesting that institutional investors are avoiding the Dollar due to fears that the Fed may be set to further loosen domestic monetary policy later in 2012.

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