Thursday, February 05, 2004

Forex News

Forex News

Bank of England Rate Decision (12:00 GMT) (4.00%, 25 basis-point hike expected)

Expectations are for the MPC to raise rates by 25 basis points on Thursday. Solid December retail sales numbers and sustained growth in housing prices suggest that the November hike had little effect in slowing the economy. With Q4 GDP coming in at 0.9% for the quarter and both manufacturing and service sector activity growing at a healthy pace, the MPC will likely maintain its tightening bias, as markets look ahead to the next rate increase. Given that the MPC hikes rates, GBP/USD should get a lift in the wake of the announcement.

European Central Bank Rate Decision (12:45 GMT) (2.00%, no change expected)

Given the recent pullback in EUR/USD, the ECB will likely keep rates on hold at 2.00% following its Council meeting. While some Euro area policymakers have called for a rate cut to stem the euro’s rise, an easing on the eve of the G7 meeting this weekend would surely come as a surprise to the market.


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