GBP AUD, GBP NZD & GBP EUR Exchange Rates Make Gains On Eurogroup Leader Dijsselbloem?s Comments

Published: Tuesday, 26 March 2013 09:00 BST - Written by David Woodsmith

STORY LINK GBP AUD, GBP NZD & GBP EUR Exchange Rates Make Gains On Eurogroup Leader Dijsselbloem?s Comments

There’s a new man at the helm of the eurogroup of Finance Ministers, and he certainly made his presence felt during yesterday’s session in the currency markets. In truth, the new head of the eurogroup Jeroen Dijsselbloem, had already attracted some attention when his predecessor Jean-Claude Juncker openly questioned the terms of the initial bailout for Cyprus, which was announced ten days ago. However, Dijsselbloem stepped into the limelight in earnest yesterday when he suggested that future eurozone bailouts would carry stringent conditions for failing retail banks of the nation sate receiving the emergency funding. Dijsselbloem’s words caused intuitional investors to pile out of the euro during yesterday’s afternoon session, sending the GBP EUR exchange rate up to its highest level since 11th February at 1.1824 just before yesterday’s European equities close.

The comments from the eurogroup’s new leader had a marked effect on global appetite for risk, as well as on the relative strength of the single currency yesterday. Share markets had initially posted strong gains when equities trading began for the week on Sunday night. The fact that one of the seventeen eurozone sovereign states had avoided bankruptcy caused a sharp improvement in global appetite for risk, which in turn triggered support for the risk-sensitive Australian and New Zealand Dollars. However, Dijsselbloem’s words soon put paid to this, eliciting a shift into safe haven assets, and in particular the safe-haven of the US Dollar-denominated T-Bill. The move sent the Pound Australian Dollar exchange rate (Currency : GBP AUD) back up as high as 1.4527 overnight, while the Pound New Zealand Dollar (currency : GBP NZD) traded briefly back above 1.8200 during last night’s Asian session. Gains for GBP NZD would have been of a greater magnitude were it not for a far better than expected set of New Zealand trade balance data for February, released overnight.

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