Bank of England, ECB both hold interest rates steady

Story link: Bank of England, ECB both hold interest rates steady

The euro touched record highs against the US dollar and the British pound on Thursday after the European Central Bank held Eurozone interest rates at 4 percent and the Bank of England’s Monetary Policy Committee kept UK interest rates at 5.25 percent.

Both actions had been anticipated by analysts.

The euro was helped by comments from ECB president Jean-Claude Trichet indicating that the Bank’s biggest worry is inflation, translated by analysts as a declaration that Eurozone interest rates will not be going down anytime soon.

Illustrating the ECB’s inflation worries, the Bank revised its inflation forecast for this year from 2.5 percent up to 2.9 percent.

The euro touched $1.5373 and 76.92p before trading at $1.5361 and 76.49p in relation to the dollar and the pound at around 11:30 a.m. in New York.

Meanwhile, the pound was above $2 to the US dollar for the first time in two months, trading as high as $2.0096 before slipping back to $2.0084 to the pound in last afternoon trade in New York.

Most major currencies were lower versus the UK currency.

The US dollar was hurt by sentiment that the Federal Reserve will cut interest rates again soon.

The greenback was down versus the yen, trading at ¥103.0600 at late morning in New York, while it touched a new low versus the Swiss franc at SFr1.028 before trading at SFr1.0294 later.