Bank of England, ECB holds interest rates steady. Euro falls in Currency Trading. | CountingPips Forex & Currency Trading Blog

August 7, 2008 - Forex Economic News

Bank of England, ECB holds interest rates steady. Euro falls in Currency Trading.

News out of Europe today focused on the Bank of England and the European Central Bank interest rate decisions. The BOE decided to leave its interest rate unchanged at 5.00 percent as widely expected. The BOE had last altered their interest rate by reducing the rate from 5.25 percent to 5.00 percent in April. The BOE did not release a statement with their rate Euro falls in forex trading announcement and the minutes of the monetary policy meeting will released on the 20th of August.

The European Central Bank also left its interest rate steady at 4.25 percent and in line with the forecasted market expectations after raising the rate by 25 basis points last month. The ECB left its interest rate unchanged this month despite over a 15 year high inflation rate in July as economic growth has begun to diminish in the eurozone.

Jean-Claude Trichet, the President of the ECB, cited in his press statement today that "information on economic activity that has become available since the July press conference suggests that real GDP growth figures for mid-2008 will be substantially weaker than for the first quarter of the year. As indicated on previous occasions, this represents partly a technical reaction to the strong growth seen in the first months of the year. In addition, it also partly reflects a weakening in GDP growth due to factors such as slower expansion at the global level and dampening effects from high and volatile oil and food prices." You can read the full Trichet statement here.

The citing of weaker economic growth in the ECB statement has helped propel the euro lower in forex trading today as speculation that more interest rate increases has dampened and a possibility of a rate cut has increased. The euro has fallen against the U.S. dollar to trade under 1.5350 dollars per euro for the first time since the middle of June. The euro has also fallen in trading today against the pound sterling from 0.7935 earlier today to 0.7885 after the rate announcement. The European currency has also seen losses today against the Japanese yen(167.85), Canadian dollar(1.6126), Swiss franc(1.6285) and the Australian dollar(1.6894).

EUR/GBP Chart - The euro falls against the pound sterling today in forex trading(1H chart).

Forex Chart

tags: interest rates, boe, ecb, forex trading

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