Traders are expecting the European Central Bank's first one-year refinancing operation to succeed in holding down money market rates as the interbank cost of borrowing the euro has fallen to record lows.  The euro-denominated three-month Libor, extended to a record low of 1.215 percent as well as a new low for the equivalent sterling Libor rate.

The offer of one year funding at one percent from the European Central Bank has grabbed the market's attention. The newly focused attention has three-month sterling and euro rates breaking well below the 1.25 percent level.

The euro exchange rate is currently at GBP 1.180 and USD 0.721.

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The rates quoted above are interbank rates. Client rates may vary according to the volume and timing of the trade.