Gaza Crisis Threatens GBP USD Exchange Rate, More Funding For Greece Could See GBP EUR Tumble

Published: Monday, 19 November 2012 09:00 BST - Written by David Woodsmith

STORY LINK Gaza Crisis Threatens GBP USD Exchange Rate, More Funding For Greece Could See GBP EUR Tumble

The dark clouds are looming over the global markets as this week’s session gets underway, leading to the prospect of a pronounced firming of the safe haven US Dollar.

The weekend currency market close saw an escalation of the Arab-Israeli crisis, specifically in the Gaza strip. A rocket attack on a residential property in the region yesterday by Israel’s government claimed ten lives, making it the highest death toll in a twenty four hour period since Israel’s assault against Hamas targets began earlier this month. Worryingly, Israel’s leader Benjamin Netanyahu has stated that his nation is set to escalate the frequency and ferocity of its attacks. Even more concerningly, the US appears to have given its tacit support to the bombardment, with President Barack Obama commenting yesterday that it supported Israel’s right to defend itself.

Risk was firmly off the menu during Friday’s European trading session, with London’s FTSE 100 and Europe’s bourses almost universally losing over 1% of their value. Investors were fighting shy of riskier assets thanks to nagging fears that Greece may not receive the next €31.5bn tranche of bailout funding which it needs to keep its head above water. The eurogroup of finance ministers meets tomorrow and the single currency could enjoy a small relief rally if they announce that they have acquiesced to more emergency funding for the troubled Hellenic state. This could send the GBP EUR exchange rate down towards the 1.22s once more.

However, with ongoing worries regarding the US’s impending ‘Fiscal Cliff’ and heightened tensions in the Middle East, the real mover on the week could be the Greenback. If appetite for risk evaporates, then expect the GBP USD exchange rate to tumble towards its near-term low of 1.5268 which it last visited in the final week of May.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: American Dollar Forecasts Daily Currency Updates Dollar Po Forecasts