Bank of England cuts interest rate to all-time low. Pound mixed in Forex Trading. | CountingPips Forex Blog

January 8, 2009 - Forex Economic News

Bank of England cuts interest rate to all-time low. Pound mixed in Forex Trading.

The Bank of England announced the decision to cut its interest rate by 50 basis points today to bring the rate to 1.50 percent from 2.00 percent. This rate reduction brings the BOE interest rate to its lowest level since the establishment of the bank in the late 1600s. Today's rate cut failed to surpass the market forecasts which were predicting a 50 Pound mixed in FOREX Trading point reduction and follows a 100 basis point reduction in early December. The BOE has now sliced off 3.5 percent from its interest rate since October in a bid to help the declining British economy.

The BOE statement accompanying the rate decision commented on the economic conditions for the rate cut saying, "The world economy appears to be undergoing an unusually sharp and synchronised downturn. Measures of business and consumer confidence have fallen markedly. World trade growth this year is likely to be the weakest for some considerable time. In the United Kingdom, business surveys suggest that the pace of contraction in activity increased during the fourth quarter of 2008 and that output is likely to continue to fall sharply during the first part of this year."

The BOE statement also said that the annual consumer inflation rate has fallen to 4.1 percent and should slide lower while the sharp decline of the pound sterling should help out the UK exports sector. Read the full BOE statement here.

Forex Trading Today - British Pound Sterling mixed versus majors.

The British pound has been mixed today in forex trading today against some of the other major currencies. The pound saw some early gains following the rate cut announcement by the Bank of England and has retreated later throughout the day.

The pound is advancing versus the US dollar for the fourth day in a row as the GBP/USD trades at the exchange rate of 1.5223 at 3:24pm EST after opening the day at 1.5077(00:00GMT). The euro has also lost ground today to the pound as the EUR/GBP trades at 0.9011 after opening at 0.9041. The pound has gained versus the Swiss franc as the GBP/CHF has gained approximately 50 pips from its opening rate of 1.6603 to trading at 1.6653.

The pound, meanwhile, has declined against the Japanese yen today with the GBP/JPY falling from 139.52 to trading at 138.75. Against the Canadian dollar, the pound has declined from 1.8028 to trading at 1.7948 despite reaching an intraday high of 1.8389.

Stay tuned for a busy news day on Friday with the US non-farms payroll announcement, Eurozone retail sales, Canadian employment data and Canadian housing starts all being released.

EUR/GBP Chart - The Euro declining against the British Pound Sterling after reaching an all-time high almost at parity in late December. (Daily Chart).

Today's Forex Chart

tags: GBP Forex Trading, BOE, interest rate, UK economy

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