Positive Spanish Bad Loans Data Sends GBP EUR Exchange Rate Lower Again

Published: Monday, 18 February 2013 18:00 BST - Written by Minesh Chaudhari

STORY LINK Positive Spanish Bad Loans Data Sends GBP EUR Exchange Rate Lower Again

Sometimes a ‘bad bank’ can be a good thing – or so it would seem. The Bank of Spain published its latest Bad Loans data earlier today and the figure proved to be good news for the euro. The numbers from Spain’s central bank revealed that the collective ratio of bad loans held by the struggling Iberian nation’s retail banking sector dropped to 10.44% in December, down from 11.38% in November. It was the first time since the early part of 2011 that the ratio had decreased, suggesting that the ‘bad bank’ introduced by the Bank of Spain at the end of last year to draw toxic assets out of the nation’s banking sector, is having the desired effect.

The news from Spain has pushed the single currency higher once more against the down-at-heel Pound. The GBP EUR exchange rate has given up another 0.20% so far today and currently trades at 1.1589. The Pound has so far failed to capitalise on an ostensibly positive Rightmove house price survey, released overnight, which revealed that the average asking price for UK properties increased by 2.8% last month. This means that British property prices are now at their highest level since the advent of the global credit crisis in 2008.

Looking ahead to tonight’s session, the key release of note comes from Australia in the form of the latest Reserve Bank of Australia policy meeting minutes. The memos of February’s meeting have the potential to be market moving, given that the statement which accompanied the RBA’s policy announcement earlier this month dropped heavy hints that there may well be interest rate cuts in store for the Antipodean economy later this year. Such an outcome could send the GBP AUD exchange rate back p into the mid-1.5000s once more.

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