The first Thursday of the month means only one thing here at World First: ECB and Bank of England rate decisions. Today could be a turning point in the fortune of sterling and I’ll tell you why.

We expect the MPC to cut rates by 50bps today taking the bank rate to yet another historic low of 0.50%. All in all that is not surprising however the letter which is expected to be published at the same time as the decision will have bigger repercussions. The letter should be a confirmation from the treasury to the Bank of England to start QE and how large their facility is.

The ECB rate decision is also expected today and should be a 50bps cut. The ECB aren’t the most rebellious of central banks and that may prove to be their downfall or certainly that of their currency. All in all we expect to see the single currency start to look really skittish soon and move, as we’ve said for 6 months now, back towards 1.20.

Data from the US was mixed yesterday. ISM for the non-manufacturing sector rose slightly to 41.6 against an expectation of 41.0 while the US jobs markets was shown to have fallen further as the ADP employment reading toppled to -697k from an expected -630k. We’ll see initial jobless claims released today as well.

Further analysis is of course always available at our video blog http://uk.youtube.com/user/WorldFirstJC

Please feel free to contact me (jeremy.cook@worldfirst.com) if you have any questions or thoughts regarding these updates or if you are interested in a particular event in the calendar. If you would like to discuss your foreign exchange requirements, please contact our: Corporate Foreign Exchange Team on 020 7801 9050 or our Private Client Currency Exchange Team on 020 7801 9080. Disclaimer: The above comments are only our views and should not be construed as advice. You should act using your own information and judgement. Although information has been obtained from and is based upon multiple sources the author believes to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute the author’s own judgement as of the date of the briefing and are subject to change without notice. Any rates given are “interbank” i.e. for amounts of £5million and thus are not indicative of rates offered by World First for smaller amounts. E&OE. Definitions of jargon/market terms can be found in our Glossary of Foreign Exchange Terms.

To view any past or present currency blogs please click on the following link www.worldfirst.com/blog

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