AUS: Pound struggles to recover vs EUR, bounces firmly vs US dollar
European markets have been trading higher in todays session, providing quite a good start to the trading week despite Spains 10 year borrowing costs rising over 6.5%, a figure widely considered unsustainable.
(The latest investment bank FX forecasts are published on our International Money Transfer site, access is Free via the Facebook gateway here)
The climate on global FX markets sees the pound euro exchange rate unchanged on Friday's closing rate at 12591. The currency pair had been sharply lower at the start of today's proceedings.
The pound US dollar exchange rate is 0.16 pct up at 1.5689.
The pound Australian dollar exchange rate is 0.76 pct down at 1.5926.
"The Pound declined this morning for the first time in five days against the Euro, while the UK currency bounced back above 1.57 versus the Dollar, albeit briefly, as concerns over the European and UK economic outlook continued to worsen," says Adam James at TorFX.
The latest Greek polls showed greater support for parties supporting a bailout, easing concern that the nation will exit the Euro, which also dampened demand for UK assets as a haven from the debt crisis.
The Pound declined today against all but two of the 16 most actively traded currencies, before significant reports this week that may show consumer confidence plunged again in the figures for April, while manufacturing contracted, adding to pressure on the Bank of England to increase stimulus through quantitative easing.
The revised GDP figures have revealed a deeper recession and the Pound may on borrowed time, amid speculation that policy makers may act as early as June.
As the situation stands - Spain's borrowing costs at 6.5% could be considered unsustainable.
Mathew Nelson at Spreadex says:
"7% yields on government debt prompted bailouts for Greece, Portugal and Ireland so Spain is getting into pretty dangerous territory. On the same note, German and UK bond yields are at record lows as investors prefer to keep piling into what is considered the safer economies within the Eurozone.
"Spain's Prime Minister Mariano Rajoy backed Bankia’s €19bn Nationalisation, giving the government a 90% holding in the failed bank. The stock fell as much as 26% in trading this morning after the stock was allowed to trade again after its recent suspension."
