Pound Euro Exchange Rate Steady Despite Downgrade Of France?s Credit Rating

Published: Tuesday, 20 November 2012 09:00 BST - Written by Ben Hughes

STORY LINK Pound Euro Exchange Rate Steady Despite Downgrade Of France?s Credit Rating

The primary risk event of note during the overnight Asian session came in the form of the release of the minutes of the latest Reserve Bank of Australia monetary policy meeting. The Bank’s policymakers announced their latest policy decision on 6th November and they surprised market participants at this time by opting to maintain domestic interest rates at their current level of 3.25%. Analysts had been factoring-in the likelihood of another trimming of rates in an attempt to kick-start flagging levels of economic activity in Australia.

On the face of it, the memos of the meeting were Aussie-negative, revealing that the RBA “members considered that further easing may be appropriate in the period ahead.” In spite of this, the Australian Dollar more than held its ground against the Pound during last night’s Asian session; the GBP AUD exchange rate briefly dipped to 1.5256 following the news. Support for the Aussie was largely due to a highly positive performance for global share markets yesterday, as investors expressed their relief that the international community was taking a firm stance with Israel regarding its ongoing bombardment of Gaza.

Elsewhere, leading credit ratings agency Moody’s has announced that it is downgrading France’s credit rating by a notch from the top grade of AAA to AA1. Moody’s has also maintained its outlook for France’s economy as ‘negative’, signifying that further downgrades could be on the cards. Moody’s reasoning behind the decision was that France remains highly exposed to a potential exit from the euro by Greece and that the Gallic state’s government funds may be sapped by future bailout payments to debt-addled eurozone states. At the moment, the euro is holding firm despite the comments, with the GBP EUR exchange rate still trading in the low 1.2400s. However, this situation is by no means guaranteed to persist for the remainder of the day.

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: Australian Dollar Forecasts Daily Currency Updates Euro Forecasts E Forecasts