The Pound BOE kept the policy rate at 0.5% but decided to expand the amount of its asset purchase program by 25 Billion pounds to 200 Billion pounds. A rally in sterling after the announced showed that the market had expected a bigger expansion. However over the course of the day it fell back to the week's average of about 1.115. The BOE also showed concerns that global imbalances could return in the near future.
The Dollar has fallen back again against the Pound and the Euro. After the BOE and the ECB announcements. With the pound hitting just over 1.66 and the Euro pushing 1.49 we could see record highs for the year over the next few weeks. It's a big day for the US with unemployment and non farm payroll data out we could see a move in the markets.
The Euro a s expected the ECB left the interest rate unchanged. President Trichet indicated that the stimulus policies will be phased out gradually. It's the 6th month that the ECB decided to keep to the same level since policymakers had taken it to a record low of 1%. The central bank believed such a low level of interest is warranted as inflationary pressure remains modest.
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