ECB, BofE hold interest rates steady

Story link: ECB, BofE hold interest rates steady

The euro was weaker and the pound saw gains Thursday after the European Central Bank and the Bank of England both held interest rates steady for another month at 4.25 percent and 5 percent respectively.

The declines for the euro came after ECB president Jean-Claude Trichet characterized Eurozone economic activity as “weak” in comments accompanying the rate decision announcement.

It was the sixth consecutive day of declines for the shared currency, which was also hurt by new data that showed German factory orders down 1.7 percent in July from June amid expectations of a slight gain.

Additionally, the ECB cut its growth forecast for the region this year to 1.4 percent from 1.8 percent and lowered its 2009 forecast from 1.5 percent to 1.2 percent.

In late morning trade in New York, the euro traded at $1.4354 to the US dollar while it took ¥1.5423 to buy a euro.

The pound saw gains versus both the dollar and the euro after 7 days in a row of declines, but gains were limited by a report from HBOS (LSE: HBOS) showing that UK house prices were down again, falling 10.9 percent in August.

Meanwhile, the US dollar was hurt by fears that consumer spending could be held back by job losses after a private report ahead of the official Labor Department jobs numbers due Friday said that the US lost 33,000 jobs in August.

The pound traded at 81.17p to the euro at late morning in New York while at the same time it took $1.7683 to buy a pound.