British Pound Sterling | Currency News Views and Outlook

British Pound Sterling: Currency markets favour USD against GBP and EUR in nervy trading atmosphere

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Category: British Pound Sterling

Published on Monday, 16 January 2012 10:52

Written by Will Peters

The likelihood that Greece will exit the Eurozone has increased this pressuring the euro on the currency markets.

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British Pound Sterling (GBP) in Euro (EUR): GBPEUR is 0.03% hihger at 1.2084.

British Pound Sterling (GBP) in US Dollar (USD): GBPUSD is 0.09% lower at 1.5303.

British Pound Sterling (GBP) in Australian Dollar (AUD): GBPAUD is 0.18 higher at 1.4865.

The British pound has been bid higher this morning in line with the nervous atmosphere on global markets.

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On Friday, the pound saw an inevitable drift lower, as speculation circulated over the course of the European and US sessions that a host of European sovereign ratings downgrades were about to be announced.

While the ratings downgrades were not confirmed until after the close of US trade, the currency markets did not wait until then.

"As speculation circulated, there was a noticeable move out of risk currencies and commodities and into the perceived relative safety of the USD. Having ended Friday’s Australian session around the 1.5350 mark, the pound slid to an overnight low of 1.5233, before staging a mild recovery to close at 1.5317. Upon reopening for Asian trade, the weaker equity markets and continuing aversion to risk has seen the pound slip back below the 1.53 level into the 1.5290 range," says Cameron Peacock at IG Markets.

After a nervy end to trading last week investors remain cautious following the S & P’s downgrades of the likes of France and other European countries. 

"It acts as a stark reminder that all is not well within the eurozone and the main threat now is not that other ratings agencies might follow suit, but that the EFSF bailout fund might be next.  With talks for dealing with Greece’s debts breaking down last Friday there was a double whammy for the markets as fears over an eventual default increased, most likely in March when their next bout of refinancing is due," says Simon Denham at Capital Spreads. 

Without the full backing from Germany to back Greek debt and turn it into an attractive investment, the Greeks have pretty much no hope of staying in the eurozone suggests Denham. 

The money presses are standing by to be restarted and dish out Drachmas only a few years after they were put on hold just over ten years ago.