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Bank of England holds interest rates

Published:  08 April, 2011

The Bank of England did as expected and kept interest rates on hold for the 25th month in a row.

The Bank of England did as expected and kept interest rates on hold for the 25th month in a row.

Currency rates _ April 8

EURO/GBP - 1.1369

US$/GBP - 1.6371
CHF/GBP
- 1.4938
CAN$/GBP
- 1.5638
AUS$/GBP
- 1.5548
ZAR/GBP
- 10.8840
JPY/GBP
- 139.28
HKD/GBP
- 12.718
NZD/GBP
- 2.094

SEK/GBP - 10.2650
US$/EURO
- 1.4399

Now we wait for the Bank of England minutes to find out their view on the UK economy and how the members of the Monetary Policy committee voted on interest rates. Following the announcement sterling gained a bit of ground but has slipped back against the euro this morning. 

The real news was happening in Europe. The European Central Bank did increase interest rates by 0.25% which was very much as expected. But the comment made as this was announced was that it was a finely balanced decision given the problems in the periphery states [e.g. Greece, Ireland and Portugal] and it was made clear that no decision had been made to make further increases in the coming months. So the market has taken the view that an increase in May is unlikely which makes sense. Elsewhere Portugal formally asked the ECB to help with a bail out. Long time coming and no surprise to anyone and had very little effect on the euro. Now to Spain where the interest they have to pay on further fund raisings will be very closely watched. At the moment the markets think the likelihood or need for any bail out is small but we wait and see.

The US$ lost ground as oil prices continue to rise. There is an inverse relationship between the two at the moment. Sterling pushed through the US$1.63/£1 level. Also deadlock has been reached for the coming year's budget. A government shut down looks ever more likely.

Elsewhere the commodity backed currencies continue to hold their own following China's increase in their interest rates at the start of the week.

Smart Currency Exchange is a currency partner to Harpers Wine and Spirit. Harpers Wine and Spirit has teamed up with Smart to provide readers with a free bespoke currency service.

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