BoE And ECB Likely To Hold Interest Rates

10 January, 2013

Matthew Boyle

Many of the market analysts feel this may be further compounded this morning as the Bank of England later today are likely to announce no change to current interest rates which will be maintained at 0.5%. In addition, its expected there will be no change to the asset purchase (quantitative easing) program either. As such this is likely to increase positive sentiment towards sterling, however large gains are unlikely as GBP has remained fairly stagnant against many of the major currency pairings in recent weeks.

In Europe again analysts are suggesting the European Central Bank will make no change to interest rates which are should be held at 0.75%. This news could further bolster the Euro which has shown slow but steady gains since the announcement of new ECB banking regulations at the end of 2012. It would certainly seem that the Eurozone is continuing to recover and this news can only help, during a time when both the UK and US economies are becoming an increasing focus for concern.

With these important data releases in Europe and the UK later today likely to be fairly positive, in the short term eyes could move back across the pond to the U.S. Since the New Year the announcement the US would extend their bond purchasing scheme, whilst delaying any change to interest rates or national spending has seen minor gains for the USD against the pound whilst remaining relatively stable within range against the Euro. However it seems we may be heading towards a stand-off situation in the markets as the US, UK, and Europe battle to show important economic recovery both internally and globally. Certainly when the interest rates are announced it will provide a interesting indicator if they are held as the analysts predict.
During this highly volatile time and as we move forward, it may become a simple be a case of timing as to who wins the ongoing “tug-of-war” battle between these currency pairings.

If you have any upcoming transfers, make sure you speak to your Currency Index broker to make sure you are on the “winning side” of the currency market.