GBP/EUR falls into the €1.31’s
I mentioned in yesterday’s post that the Sterling/Euro rate could be on the way down, and it’s happening quicker than expected. Today we have seen the rate fall a further cent bringing the mid-market level down into the €1.31’s. So, why has the Pound/Euro rate fallen?
It’s to do with Greece. One of the reasons the rate has risen so well was fears the Greeks could exit the Euro after their recent election was won by the new Greek government, led by the left-wing Syriza party. Today, it seems they have now stopped calling for their debts to be written off, and instead are now proposing the standoff with its official creditors by swapping the debt for new growth-linked bonds. This has been taken as positive news for the Eurozone, and accordingly the Euro has gained strength, pulling rates lower.
It is impossible to predict of course if the drop will continue, but if the ECB’s Quantitative Easing measures have the desired effect, we could see more Euro strength. Also consider that it’s now forecast that UK interest rates won’t go up until August 2016, so it’s hard to see where any Sterling strength will materialise from.
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GBP/AUD rises to highest in over 5 years
The RBA last night surprised the markets and cut the Australian interest rate by a quarter of a percentage point. This weakened the Australian Dollar, pushing rates to nearly $1.97 before selling back around the $1.95/$1.96 mark. This is now the best buying level in 5 and a half years, and you can see from the chart below the immediate spike when the announcement was made.
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GBP/USD rises to $1.51
This currency pair had recently been testing the $1.50 support level, but a host of poor economic data from the states today has weakened the Dollar, pushing rates a cent higher to $1.51. However as the US are likely to be the first western economy to raise interest rates, we could well still see the rate drop into the $1.40’s.
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