You've landed on our UK website.
Click here to visit our USA website.

If you are having difficulty locating the information you require, we're here to help. Just get in touch and we will do our best to assist you.

Decision day on interest rates for BoE & ECB

Decision day on interest rates for BoE & ECB

The anticipation is for a 50 basis points cut for both the Bank Of England at 12:00 GMT and the European Central Bank at 12:45 GMT. The question is how will this affect the markets? The key to todays announcements by the central banks will not lie in the policy easing itself but the associated actions and rhetoric on moving forward to combat the slowdown. It is expected that the UK will discuss the introduction of quantitative easing in the near future to help increase money supply, it is difficult to asses how this will impact on the pound as it is an untried method for the UK economy. On the one hand it could be perceived that the measure is necessary and a proactive stimulus to the economy; Quantitative Easing is also inflationary and so this could benefit the pound. On the flipside, many economists argue that the measure will not effectively increase money supply as planned and if this transpires the pound will be sold off.

The ECB's post decision press conference at 13:30 GMT will be watched closely for what action the ECB plan to take going forward; again Quantitative Easing could be touted along with further interest rate cuts; it is expected that a dovish sentiment will transpire which is contrary to recent sentiment- this could weaken the euro and push it through the 1.25 level against the US dollar.

Yesterday we saw further weakness in the US economy as the Fed Beige book- a measure of US economic conditions, identified a slowdown in nearly all sectors. This reaffirms Fed chairman Ben Bernanke's recent comments that the slowdown is set to deepen and that the US will need to act aggressively to stem the downturn.

In the UK this morning we have seen UK Halifax house price index sink by 2.3% in February from January- this figure correlates to the recent Nationwide index and identifies the January rise in the index as an anomaly. The pound started on a strong footing but since the Halifax data it has slumped half a cent on the dollar.

The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.

If you wish to unsubscribe / cancel your subscription to this publication please click here.

Check our exchange rate

Thanks, we'll be in touch.

Check your inbox - one of our currency experts will be in touch to complete your quote.

If you want see our online exchange rates straight away, simply register online & log in.