Interest rates and QE today

4 April, 2013

Matthew Boyle

Following the recent overnight 2 cent jump in the GBP/EUR rate seen as a result of the Cypriot financial crisis the markets have remained relatively stable over the last week or so, with little in the way of any major movements. However this is likely to change and quickly as the Cyprus situation plays out and given there are a number of important data releases out today and in the coming weeks.

With the rate of unemployment in the Eurozone hitting a record high in February – now at 12%, and Cyprus agreeing a 10 Billion Euro bailout it would be likely to think that we would see a further weakening in the single currency. However despite this and he fact the last few days have shown slightly more stability than we have seen in recent weeks, the Euro has made minor gains against the pound, perhaps surprising given the ongoing Eurozone issues.

Today will certainly see this pairing go directly head-to-head as the BoE and ECB both announce Interest rate decisions, albeit both are estimated to remain the same. What is likely to be much more important is the monetary statement from the ECB and the BoE announcement in regard to Q.E. Certainly in recent months talk of potential further Q.E has been on the increase as has fears of a triple-dip UK recession, and whilst although The British Chamber of Commerce has said that the UK will avoid this the markets will no doubt see some movement given any sign or warning that is the case.

Elsewhere we also have Fed Governor Ben Bernanke speaking today, which whilst of note is not likely to draw much attention from the ongoing battle between the pound and Euro that has been the centre stage attraction for some time. It must be said that the US have at least done an exceptional job at avoiding the much feared financial cliff of 2012, and the greenback has certainly reaped the rewards so far in 2013.

If you have any upcoming currency transfers make sure you speak to your Currency Index broker as soon as possible to stay ahead of the markets in these uncertain times.