Sterling Euro Exchange Rate Suffers As BoE Governor Warns Of Liquidity Problems For Britain?s Banks

November 29, 2012 - Written by Minesh Chaudhari

STORY LINK Sterling Euro Exchange Rate Suffers As BoE Governor Warns Of Liquidity Problems For Britain?s Banks

Risk was firmly back on the menu during this morning’s trading session thanks to encouraging data releases from continental Europe. Switzerland led the way with the release of Q3 GDP data at 0645hrs GMT. The numbers revealed that economic activity in the Alpine nation expanded by a quarterly 0.6%, far ahead of expectations of a showing of just 0.2%. This equates to an almost-respectable annual growth rate of 1.4%.

German unemployment figures, released a couple of hours later, added to the mood of optimism amongst the investment community. The data showed that only 5,000 German workers had been added to the ranks of the unemployed this month, against expectations of an increase of 16,000.

The positive data sets have seen London’s FTSE 100 register gains of almost 1% by the middle part of the day’s trading session, while Europe’s bourses made gains of a similar magnitude.

Elsewhere, there were worrying comments regarding the state of the UK’s banking sector from current Bank of England Governor Mervyn King this lunchtime. King issued a warning that UK banks may require between £5bn and a whopping £35bn of new capital in order to shore-up their flagging balance sheets. It appears that Spain’s banking sector is not the only one creaking under the pressure of the now long-standing credit crisis. The BoE Governor’s comments, in combination with ongoing fears that leading ratings agencies may be considering downgrading UK government debt from its current AAA rating, have made for a difficult day for Sterling. This has seen the GBP EUR exchange rate drop as low as 1.2321 this morning, while the GBP NZD exchange rate has edged lower to trade to 1.9363 on the session.

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: Currency Predictions Euro Forecasts Euro Pound Forecasts Pound Euro Forecasts