Bank of England and European Central Bank Decisions Due Today

The Bank of England and The European Central Bank are announcing monetary policy decisions today which are likely to affect investors’ choices and have a bearing on the currency markets. Most focus is on European Central Bank President Jean Claude Trichet’s press conference at 12.30pm in which he will outline the bond purchasing programme designed to help build confidence in the Euro. To discuss how to manage market volatility, speak with your personal broker today.

Pound Sterling – UK Markets

The Bank of England is expected to announce that the key interest rate will be left at 0.5 percent, an all time low, in order to support UK economic recovery. There is also likely to be a focus on inflation which has surpassed twice the target rate of 2%. The extent of economic recovery will also be discussed and consideration given to the effect of trouble in Europe which is the UK’s main trading partner.

US Dollar – US Markets

The US Dollar has lost some grounds against most of its major counterparts so far today. Growth reported by new economic data in the Asia-Pacific area has caused demand for currencies that are higher yielding to rise causing investors to choose those currencies over the Dollar.

Euro – European Markets

The Euro has edged higher this morning as investors are awaiting the European Central Bank’s press conference this lunch time. Trichet will be providing more details on the Central Bank’s bond buying programme that was approved in April and is designed to rebuild confidence in the Euro. This policy has caused some controversy as some believe it may cause inflation. The key interest rate is expected to remain at 1%.

Other Currencies – Highlights

Data has been released that reveals Asian Pacific economies are best weathering Europe’s debt crisis. China’s exports have grown by 48.5% compared to a year earlier, Japan’s economy has expanded more than expected in the first quarter and unemployment in South Korea has fallen. The Australian and New Zealand Dollar have climbed as the New Zealand Central Bank raised its interest rate to 2.75% for the first time since the start of the global crisis in 2008.