Exchange Rates Today - Pound Euro Rate Climbs, Pound Australian Dollar Similar Gains

Modified: Friday, 19 July 2013 14:57 BST - Written by David Woodsmith

STORY LINK Exchange Rates Today - Pound Euro Rate Climbs, Pound Australian Dollar Similar Gains

Exchange Rates Today - Pound Euro Rate Climbs, Pound Australian Dollar Similar Gains

The overnight new that Motor City has filed for bankruptcy has come as a blow to America’s pride and to the US Dollar alike. For decade after decade since the advent of the mass production of the motor car during the early part of the twentieth century, Detroit was known the world over as a hotbed of industry and a strong and stable source of job creation for Middle America.

However everything changed for the city when 2007’s subprime mortgage crisis paralysed global credit markets in 2007/08. Car plants scaled down their production and some even closed their doors, whilst whole streets of houses were reposed by lenders. It is estimated that some 70,000 properties still lie unoccupied in the city and the steady flow of workers out of central Michigan has caused the state’s annual tax revenues to drop off sharply.

It is now widely believed that the level of debt owed by the city of Detroit tips the scales at $18bn – something had to give and this resulted in yesterday’s request from Michigan’s emergency manager Kevyn Orr to a federal court to place the city into official bankruptcy protection. The move acted as a stirring reminder to currency market participants that the US economy’s problems are a long way from being resolved and the news would now appear to make a near-term tapering of Quantitative Easing by the Federal Reserve a more distant possibility. Ordinarily, this would have triggered a bout of support for the Greenback, but the US Dollar has lost ground against Pound Sterling so far today sending the Pound Dollar exchange rate up to as high as 1.5264 GBP/USD during this morning’s trading session.

Elsewhere, there was a small boost for the Pound earlier when the latest government estimates suggested that UK public borrowing had after all shown a drop during the last fiscal year. The news helped the Pound euro exchange rate climb to 1.1638 GBP/EUR while the Pound Australian Dollar (GBP AUD) exchange rate registered a similar level of gains.

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