Thursday 8 brings BOE and ECB to the stage. The European Central Bank and the Bank of England will publish their monthly monetary policy decisions in a context of fast growing inflation, with strong currencies in both cases, and recent economic data pointing out to an acceleration of the economic slowdown. In such circumstances the odds are widely in favour of keeping interest rates on hold at 4% and 5% respectively.
BoE's MPC will feel the pressure for a rate cut to 4.75% after the 25 bp cut approved at lat month’s meeting. Nevertheless, the risk of feeding inflation, currently running at a 2.5% year on year pace, and with food and energy prices not giving any hints of moderation, committee member should be inclined against lower rates, which could add upward inflationary pressure as well as weaken the Sterling.
The ECB is facing quite a similar scenario, with Inflation growing at a 3.3% yearly rate, the Bank can not raise interest rates easily with the Euro running at the highest levels ever, harming thereby European exports and weakening business as well as consumer confidences further in the Euro Area.
Check the effect that the meetings have over the pairs in our Rates and Charts Section or compare the movements of the different banks in our World Interest Rates Table.
In-Depth Analysis: Fundamental
- · ECB: Preview of today's meeting by Danske Bank A/S
- · Daily Market Briefing - British Pound Hit Hard As UK Data Raises Chances of BOE Rate Cuts by FXCM
- · Monetary-policy meeting at the ECB by Jyske Bank
- · Monetary-policy meeting at the Bank of England by Jyske Bank
- · European and US summary - Central Banks Eyed by Forexnews.com
- · Currency and Stock Markets Weekly Outlook - Central banks and the trade gap in focus by X-Trade Brokers, XTB
- · News and opinion from the ground - ECB's Trichet Warns About Global Inflation Risks by GraceCheng.com
In-Depth Analysis: Technical
- · Forex Trading Strategies - ECB meeting likely to trigger plenty of volatility by Saxo Bank
- · Daily Forex Commentary - Rate Announcements… by Jyske Bank
- · Daily Forex Technical Report - Volatility Builds Up Ahead of ECB & BoE by ActionForex.com
- · Daily Forex News - ECB focus on inflation as Oil surge to fresh record high $ 122.31 by ACM - Advanced Currency Markets
- · Daily Forex Commentary - Waiting for the ECB… by Jyske Bank
- · Daily FX Report - Focus on Europe with ECB and BoE policy meetings by Varengold Wertpapierhandelsbank AG
Related News
- · Gold eases as dollar extends gains ahead of ECB rates meeting (Thomson Financial News)
- · Euro, pound steady ahead of key interest rate decisions (Thomson Financial News)
- · Central Banks will, most likely, leave interest rates unchanged (FXstreet.com)
- · Pound lower as speculation of a UK rate cut steps up (Thomson Financial News)
- · ECB puts worldwide losses due to market crisis at 320 bln euros so far - report (Thomson Financial News)
- · Dollar rangebound in afternoon trade in Asia ahead of ECB meeting (Thomson Financial News)
- · U.S. dollar remains firm against euro; focus on ECB, UK rate decisions (Thomson Financial News)
- · Dollar trades in narrow range in Asia ahead of ECB, BOE meetings (Thomson Financial News)
- · Bank Of England To Unveil Mortgage Bailout (Dow Jones)
Analysts' comments
- · Ashraf Laidi, chief currency analyst at CMC Markets:
"We certainly do not expect (ECB President Jean-Claude) Trichet to temper his persistent hawkish rhetoric as oil prices surge to new highs, but to shed more attention to the downside risks of the euro zone economy." - Thomson Financial News - · Lee Hardman, strategist at the Bank of Tokyo-Mitsubishi UFJ:
"We think that there could be a rebound in sterling if the BoE keeps rates on hold as there is a one-in-four chance of a cut priced in, but we are still negative on the longer term outlook on the pound." - Reuters - · Hans Redeker, global head of forex strategy at BNP Paribas:
"We believe that a BoE cut at this stage is unlikely, even given the recent deterioration in the UK data." - Thomson Financial News
