Go-Ahead Euroland GDP Forecast Predicted to Help Euro to Pound Sterling Exchange Rate EUR GBP

Modified: Tuesday, 5 May 2015 16:53 BST - Written by John Cameron

STORY LINK Go-Ahead Euroland GDP Forecast Predicted to Help Euro to Pound Sterling Exchange Rate EUR GBP

Trading in the global currency markets began in earnest for the week a short time ago after a long weekend in many parts of the Western world. Subsequent hours have brought significant developments which have triggered pronounced price action for various leading tenders.

The Reserve Bank of Australia (RBA) lead the way during early trading this morning with the publication of its latest monetary policy announcement. Few analysts were surprised that the Aussie central bank had opted to trim its key lending rate to a new record-low of 2.00% in response to the continued lacklustre performance for world commodities prices. The move represented the RBA’s second rate cut in the space of three months. The move which followed for the Australian unit surprised some investors, with the Pound Sterling Australian Dollar exchange rate slumping from an intraday high of 1.9401 all the way down to 1.9104 two hours after the decision.

The reason for the rapid improvement for the Aussie lies in the tone of the statement from RBA Governor Glenn Stevens which accompanied the announcement. Stevens dropped heavy hints that this would be the last rate cut for now by stating that, ‘improved trends in household demand over the past six months and stronger growth in employment’, had made this a tricky judgement call. On a more pragmatic note, Stevens stated that, ‘looking ahead, the key drag on private demand is likely to be weakness in business capital expenditure in both the mining and non-mining sectors over the coming year’.

Elsewhere, the eurozone has once again featured large in today’s headlines; the European Commission (EC) issued a go-ahead prediction regarding the future prospects of the euroland’s economy earlier today and the single currency recorded decent gains as a result. The EC confidently forecast that the region’s economy will expand by 1.5% this year – a 0.2% increase on its previous forecast. However, the EC slashed its growth forecast for Greece from 2.5% to 0.5%, but that didn’t stop EC Commissioner Pierre Moscovici stating that, ‘the European economy is enjoying its brightest spring in several years, with the upturn supported by both external factors and policy measures that are beginning to bear fruit.’ The Pound Sterling euro exchange rate dipped to as low as 1.3558 in response.

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TAGS: Australian Dollar Forecasts Currency Predictions Euro Forecasts Eur Forecasts