British Pound Sterling: Currency sinks to record low vs Australian dollar, GBP/EUR rate also in decline

Last Updated on Tuesday, 07 February 2012 13:50 Written by Will Peters Tuesday, 07 February 2012 13:48

British Pound Sterling (GBP) in Euro (EUR) is 0.3% lower at 1.2012, British Pound Sterling (GBP) in US Dollar (USD) is 0.06% lower on the day, GBP/USD is at 1.5812. The British Pound Sterling (GBP) in Australian Dollar (AUD) exchange rate is 0.67% lower at 1.4648.

"The British Pound lost ground against the Euro earlier today, while the UK currency also sank to a fresh 27-year low versus the Australian Dollar and declined against a basket of currencies following a report from the British Retail Consortium, which showed that UK retailers suffered their second worst January on record," says a foreign exchange rate note from Adam Solomon at TorFx.

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Slower economic growth and a worsening outlook meant consumer spending suffered with sales down 0.3% from a year earlier.

A separate report from the Royal Institution of Chartered Surveyors showed that the UK property market continued to struggle, amid deteriorating economic conditions, which helped push down asking prices.

The report is the latest to show the sovereign debt crisis in Europe is restraining demand for property and the index follows a report from the Halifax last week, which said prices were down at the lowest level in 2 ½ years.

"The Pound also declined against the U.S Dollar, as UK stocks declined, as investors waited for Greece’s politicians to agree on fresh austerity measures to secure a second bailout and China said its industrial output may decline this year," notes Solomon.

The Euro slumped by the most in a week against the Dollar, as the elusive agreement on Greek spending cuts continues to dominate market sentiment. The single currency recovered marginally after the German Chancellor Angela Merkel and the French President Nicolas Sarkozy proposed setting up a separate account for Greek debt payments in an attempt to reassure creditors.

The Australian Dollar rallied strongly against the US Dollar and the Pound earlier today, after the RBA unexpectedly left interest rates on hold, raising investors’ appetite for higher-yielding assets. The Aussie Dollar made strong gains against all of the 16 most actively traded currencies, as the Bank indicated that global growth will continue to strengthen. The bullish stance of the RBA came as a surprise following two consecutive months of rate cuts and the move will support the Aussie and risk appetite as a whole.