If central banking is meant to be boring then yesterday’s meetings from the Bank of England and the European Central Bank were textbook. Both banks decided to hold rates at their current level of 0.5% and 0.75% respectively and, in the Bank of England’s case, no increase in asset purchases was announced either.

Members of the BOE have obviously decided that the data in the UK has not got materially worse in the past month and that the improvement in the UK services sector in February as shown by this week’s PMI number was an indicator of solid overall expansion. I now think that the Bank of England will now hold policy as it stands until Mark Carney takes the reins of the MPC in July.

Sterling rallied on the announcement initially but weakened through the afternoon as Mario Draghi’s press conference, US initial jobless claims and market expectations around today’s payrolls announcement started to have an impact.

The ECB, while holding rates at 0.75%, revised both growth and inflation forecasts lower for the Eurozone. Draghi emphasised that while downside risks to the Eurozone remain, “economic activity should gradually recover, supported by a strengthening global backdrop and our accommodative monetary policy stance”. A rate cut had been discussed by the Executive Board we were told however the “prevailing consensus was to leave the rates unchanged”.

There was no mention of the strength of the euro from Draghi, maybe as a result of the 4% fall that the single currency has taken since the beginning of February. Most of this is as a result of the uncertainty caused by the Italian election.

Elsewhere in the Eurozone we heard that German factory orders unexpectedly fell by 2.5% YOY in January on the back of recent poor demand from the rest of the Eurozone. This number is strongly correlated with EURGBP and should, ceteris paribus, see EURGBP come lower.

Today’s Non-Farm Payrolls announcement will be very interesting to see given the recent increase in chatter from some Federal Reserve members that improvements in the jobs market could lead to an end to the very loose monetary policy the bank is operating sooner rather than later. This month’s ADP release as well as yesterday’s jobless claims numbers have pointed to a healthier employment picture than people had expected and the 165k rise in jobs that the market is looking for this afternoon could very easily be beaten.

A strong number will lead to further USD gains against all of its crosses and in absence of UK data should see GBPUSD plumb new depths under 1.50.

Have a great weekend

P.S. Six Nations predictions: Wales, France, England

View the latest exchange rates or use our interactive rates, graphs and charts.