Thursday, 7 Jan 2010

Bank of England Holds Rates Steady

Today's European trading session was highlighted by the decision of the Bank of England to hold its benchmark interest rate steady and to leave in place policies enacted in order to increase liquidity in the English financial markets. The Pound is trading lower and the dollar has been strengthening as we approach the opening of New York trading.

Market participants say this was a predictable move by the BOE as the British economy continues to show small signs of improvement. Rising housing prices were apparent after the release of the monthly Halifax HPI. The index showed a 1% increase in the price of homes in Britain; however, this was not enough to strengthen the Pound.

The cable was trading lower today, near the 1.5926 level after opening the day at the 1.6000 level. The pair is down over 1.6% since the start of the new year. The dollar is stronger across the board as the EUR/USD fell to the price of 1.4332 from an opening price of 1.4400.

As the opening bell approaches for the New York trading session, traders will want to follow the U.S. weekly unemployment claims. The data is set to be released at 1:30pm GMT time. Stronger than expected employment numbers could continue to push the dollar higher during today's trading, perhaps sending the EUR/USD lower to the support line of 1.4260.