GBP/AUD & GBP/CAD Exchange Rates Break To New Multi-Year Highs

Modified: Friday, 22 November 2013 10:18 BST - Written by Minesh Chaudhari

STORY LINK GBP/AUD & GBP/CAD Exchange Rates Break To New Multi-Year Highs

The Commodity Dollars took a pounding in the global currency markets yesterday as investors continued to price-in a higher percentage chance that the US Federal Reserve will be cutting Quantitative Easing before Christmas. Investors took fright at the comments contained in the latest Fed minutes, published on Wednesday evening, which suggested that a reduction to QE could be imminent, causing the New Zealand, Australian and Canadian Dollars to give up significant ground against Sterling. The result saw the Pound to Australian Dollar exchange rate break through to a new multi-year high in the 1.7500s GBP/AUD overnight.

Comments yesterday morning from Reserve Bank of Australia Governor Glenn Stevens which suggested that his bank might be preparing to dump Australian Dollar denominated assets on the market in an effort to weaken the Aussie caused the Australian tender to slump and the prospect of a currency war between leading global central banks shook investors’ appetite for risk. The fall-out from this development helped to send the Pound to Canadian exchange rate through the 1.7000 GBP CAD level for the first time in several years. There could be further upside for GBP CAD later today when Consumer Price Index inflation numbers are published in Canada. A lower than expected print would surely see GBP CAD establish itself back in the 1.7000s.

Elsewhere, the euro put in a relatively tame performance against Sterling yesterday, sending the GBP EUR exchange rate back above the psychologically significant 1.2000 level during after-hours trading in London. The Pound enjoyed sustained support in the market yesterday thanks to encouraging public sector borrowing figures which helped GBP EUR. More talk of negative interest rates in the eurozone during today’s session could send GBP EUR up to a fresh 10-month high above the pair’s near-term peak of 1.2048.

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