Surprising the overall market, the Bank of England cut rates by a whopping 150 basis points to 3 percent at the start of the New York morning.  The decision places the domestic interest rate to the lowest level in almost five decades and showcases a central bank ready to enact aggressive measures to stave off a global recession.  Policy makers defeated earlier expectations of a 50-75 basis point reduction in the base rate.  European central bankers additionally followed suit, dropping interest rates by 50 basis point to 3.25 percent.  Both actions are seen as adequate and accommodative with ECB President Jean Claude Trichet noting that further rate reductions cannot be ruled out at this point. 

The anticipated rulings boosted the pound sterling slightly while suppressing euro strength against the US dollar.  In the New York session, the pound is trading at 1.5900 while the euro is trading 150 pips lower at the 1.2800 figure.  Incidentally, adding to the single currency’s decline seems to be pressure stemming from the commodity markets.  Crude oil contracts continue to trade down, lower by $1.74 at $63.56 a barrel.  Front month contracts declined yesterday on an Energy Department report that showed gasoline stockpiles rising last week.

Tags: Bank of England, European Central Bank, Pound

This entry was posted on Thursday, November 6th, 2008 at 10:51 am and is filed under British Pound, Currency Trading, Economic Indicators, Euro. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.