British Pound Sterling | Currency News Views and Outlook
British Pound Sterling: Currency strength persists as UK borrowing costs fall; short-term pullback registered vs EUR, USD and AUD as markets take breather
- Category: British Pound Sterling
- Published on Tuesday, 15 May 2012 08:47
- Written by Sam Coventry
The pound sterling (Currency:GBP) is lower against a host of currencies this morning as the UK currency takes a breather after yesterday's impressive gains.
Looking at the key spot rates:
The pound euro exchange rate is 0.29 pct down on the day; GBP-EUR is at 1.2509 at 9:35 BST.
The pound dollar exchange rate is 0.1 pct down at 1.6077.
The pound Australian dollar exchange rate is 0.41 pct lower at 1.6099.
This morning markets, and the euro in particular, have stemmed losses on the news that German GDP figures came in significantly better than expected. GDP rose 0.5 percent from the fourth quarter, when it fell 0.2 percent.
Another factor driving sterling value this morning is the announcement by the Office for National Statistics that the goods trade deficit inched down to 8.56 billion pounds in March from 8.59 billion pounds in February. Economists had forecast a gap of 8.40 billion pounds.
However - the ultimate driver of recent pound sterling strength remains the safety presented to investors by British debt.
Britain's borrowing costs fell to their lowest level since records began, as investors dashed for the safety of gilts in the midst of heavy stock market falls.
Renewed fears of an imminent Greek exit from the euro sent stock markets across Europe tumbling, as the region’s debt crisis entered a dangerous new phase.
With stock markets tumbling in every European capital, the interest rate on UK gilts, perceived as a relative safe haven from Eurozone chaos, fell to 1.87 per cent, The Daily Mail reports.
This demand continues to keep sterling well-bid.