Key day for rates today

7 March, 2013

Matthew Boyle

Today is likely to be an extremely volatile day in the markets as we see a number of very important and telling releases. We have both the BoE and the ECB meeting later today with rate decisions which will inevitably add fuel to the ongoing battle between the Pound and the Euro. Analysts are predicting that both the BoE and ECB will keep rates the same – at 0.5% and 0.75% respectively which may give reason as to why there has been little movement this week. Indeed there is often talk of how these predicted results are already priced into the market, and certainly in the early part of this week there has been little movement in the GBP/EUR cross which supports this reasoning and the fact that the figures are predicted to remain unchanged. However since yesterday we have seen the pound lose almost a cent against the single currency come this morning , so it should be asked – are the markets moving prior to negative pound/ pro euro data later today, or in fact are we just seeing what we have done in recent weeks, that investor and market confidence still lays heavily with the single currency?

It will certainly be an interesting day as we also have Bank Stress data in the U.S which is an important test that can affect monetary policy. In recent weeks the US dollar has regained its strength hugely – rising to 2.5 year highs against the pound – so this data combined with the rate decisions across the pound could perhaps only add to the USD continuing strength. Elsewhere we also have Japanese Q4 and yearly GDP figures which may be a provoking release as in recent months the yen has been struggling with ongoing talks of a quantitative easing programme on the table.

Certainly though the main focus today will be on the UK and Europe, as the banking institutions meet and the struggle for recovery continues, whilst the currently strong US dollar will most likely look on and regardless of the outcome continue its gains against both.

With the Pound having lost a cent already against the Euro in the last 24 hours, if the BoE announcement comes in under prediction we could see the pound hit massively by the euro which has already made almost 7% gains this year alone. If you have any currency transfers to make coming up make sure you speak to your Currency Index broker to stay informed and ahead of the markets, ensuring you don’t lose out in these currently turbulent times.