ECB cut interest rates to record low
8 November, 2013
Thursday’s trading was an eventful day in particular for all Euro crosses. Shortly after the BoE announced an expected hold on rates, a much anticipated rate cut from the ECB was then announced, backing up president Draghi’s recent statements that interest rates will continue to remain low, ‘or lower’ for an extended period. As soon the announcement was made the Euro lost 1% value against the pound and the US Dollar, and Draghi’s press conference did little to change this negative impact on the markets. This will come as welcome news to any Euro buyers as GBP/EUR rates have now gained over 3 cents in just 1 week and now back up the highest levels this year. We could well be seeing a short term peak at rates battle with the same ceiling of resistance that saw a 3 cent drop off throughout the month of October, therefore providing an excellent opportunity for buyers to fix their rate for any larger requirements over the coming weeks and months.
Elsewhere yesterday the US announced their latest GDP figures which were significantly better than forecast with growth of 2.8% on the year against a prediction of 2%, and a quarterly growth of 1.9%. This data was somewhat overshadowed by the Euro interest rate decision, but was certainly reflected in EUR/USD rate which dropped by over 2 cents at their peaks.
After an excellent weak for the pound, whether we finish on a high or not today will largely be down to the results of this morning’s Trade Balance figures at 9:30am. The results of this will likely decide whether GBP/EUR rates fall from today’s peaks, or continue to push on through the strong resistance where it currently sits. It is also a big afternoon for the US Dollar with Octobers Non-Farm payroll figures due out a 1:30pm. With so much going on make sure you are keeping in close contact with your account manager should you have an interest in either Euros or US Dollars over the coming days.
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