BRITISH Pound to Euro (GBP/EUR) Exchange Rate HIGHER on Above Forecast Reports

July 13, 2014 - Written by John Cameron

STORY LINK BRITISH Pound to Euro (GBP/EUR) Exchange Rate HIGHER on Above Forecast Reports

The British Pound (GBP) exchange rate has advanced against the Euro, US and Australian Dollars today as better then forecast UK CPI data bolstered the Sterling.

For your reference, here is a snapshot of the latest forex rates:

- The pound to australian dollar exchange rate is +0.57 per cent higher at 1.82990 GBP/AUD.
- The pound to euro exchange rate is +0.49 per cent higher at 1.26063 GBP/EUR.
- The pound to dollar exchange rate is +0.29 per cent higher at 1.71379. GBP/USD.

Analysts forecast that the Australian Dollar (currency:AUD) will come under renewed selling pressure when trading in the global currency markets gets underway for the week, following comments posted by Reserve Bank of Australia (RBA) Governor Glenn Stevens.

The top man at the RAB has been attempting to jawbone his local currency weaker for the past two months in an effort to boost Australia’s domestic export industries, but Friday’s musings from Stevens brought a pronounced change of tack. His efforts so far have concentrated on directly talking down the Aussie, with the RBA Governor stating ten days ago that the local unit was, ‘overvalued, and not just by a few cents’.

However, Stevens’ comments at the end of last week concentrated on the possible effect which an interest rate hike from the world’s leading central bank might have on emerging market tenders including the Aussie.

Stevens observed that, in the event of a tightening of monetary policy from the US Federal Reserve, ‘the likelihood of some disruption in markets is probably pretty high because it always is when the Fed eventually changes course.’ He went on to assert that this ‘will be the case even though they will be very careful and measured and signal and so on, as they’re doing.’

It appears a near racing certainty that America’s central bank will be hiking its headline interest rate before the middle part of next year and the move will be widely trailed by the Fed for months before it actually takes place.

Steven’s comments linking the Aussie’s fortunes to Fed policy ensure that each time a strong data set emerges from the States, or a US policymaker hints that a rate raise is close at hand, the Aussie will lose ground.

Euro and Aussie Dollar at Risk Over EU Banks

Meanwhile, another situation threatening both the risk-sensitive Australian Dollar and the euro (currency:EUR) is the ongoing balance sheet problems of retail banks on the periphery of the eurozone.

Chris Gaffney of EverBank Wealth Management observed as last week’s session in the global markets drew to a close that, ‘Portugal is the latest thing to worry about, but it’s not big enough to really shake the market too bad.’

However, the risk of contagion from the perennial Iberian struggler to other euroland debt trouble spots has the potential to trigger a flight to safety which would be likely to send the Pound to euro exchange rate (GBP/EUR) sharply higher and the Pound to Australian Dollar exchange rate (GBP/AUD) in a similar direction.

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TAGS: Australian Dollar Forecasts Daily Currency Updates Euro Forecasts E Forecasts