Forex Flash: Key BOE interest rate eyed – UBS (Barcelona) - Both the Bank of England and the ECB meet today. According to Research Analyst Gareth Berry at UBS, “Our European economics team looks for no change to policy settings - very much in line with consensus. So sterling is unlikely to react to the small bundle of BoE headlines at 1200 GMT. In fact the team now thinks the BoE will wait until Q2 or even Q3 before resuming Gilt purchases (previously they had penciled in February). We will have to wait two weeks for the minutes to reveal the voting breakdown.”

The euro's reaction is potentially more complex. Market speculation about a possible cut to the deposit rate refuses to go away, and so an unchanged depo rate decision could provide the euro a brief moment of respite. However, we see three possible routes to moderate currency weakness on the back of ECB President Draghi's press conference - admittedly none of which are very likely to occur: acknowledgement of 'downside risks' to the inflation outlook (risks are currently deemed 'broadly balanced'), while any revelations that the refi rate decision was finely-balanced any hint that the concept of a negative deposit interest rate is finding support on the Governing Council.