Interest Rate

The BOE held the interest rate at 5.00% as expected.

No big moves in the GBP after this data as this did come out on par with forecast.   

At 7:00 AM today, the Bank of England will release the UK's Interest Rate decision. At 7:45 AM the ECB will release the EUROZONES's Interest Rate decision. This announcement is based on the votes from the respective groups on to where to set the interest rate. Both releases are forecast for no change (UK at 5.00%/EUROZONE at 4.00%) . If there is a surprise move, expect the related currencies to react sharply.

The ECB keeps the Interest Rate at 4.00% to no surprise. 

Very little change in all EUR pairs initially as this was expected.  There will be a press conference later from the ECB regarding decision. 

Coming off 3 rate cuts since December, The Bank of England kept the Interest Rate UNCHANGED at 5.00% as forecast.  This gave the GBP a strong push initially as there was strong thought that the BOE would cut this rate by a quarter.  The slight gains made after this release reversed soon after as the GBP took a hit.

The EUR Interest Rate remains at 4.0% from the previous 4.0%. No cut was expected.

The EURUSD jumped up about 10 PIPS initially after this data, while the other EUR crosses did not have much movement.

The GBP Interest Rate gets cut to 5.0% from the previous 5.25%.  The forecast was for 5.0%. 

This news shot the the GBPUSD up about 40 PIPS.  The GBPJPY had an initial rise only to jump right back down to the levels before the release.

Highlights:

• BOE Expects inflation to rise further this year
• Balance of risks to inflation in medium term justifies out this month
• Even if commodity prices remain at current high levels, inflation should fall back
• GBP fall will support exports but prospects for output growth abroad have worsened
• Credit conditions have tightened, availability of credit seems to be worsening

According to Nigel Lawson, the former Chancellor of the Exchequer, "We (UK) are probably facing a recession of some sort in the western world".  He followed "A cut in interest rates to 5% is vital and is long overdue".  With the recent poor economic data in the UK, the EUR hitting record highs vs. the GBP, the IMF cutting its growth forecasts for the year, and a housing slump not seen since 1992, at 7:00 AM the BOE is expected to cut its rate for the third time since December 2007.  The fear of recession is not strictly in the US.