As widely expected the bank of england cuts the bench mark rate to 5.25%. The pound had a big negative day against the dollar.
The european central bank left rates on hold at 4%. However, Jean Claude Trichet did signal that there could be rate cuts in the future. This is the first time he has made such a comment, clearly suggesting that the eurozone is at the top of the rate cycle. Will this be the top of the long eur/usd uptrend? It’s a possibly but the dollar fundamentals are still looking very weak for 2008 with the likelihood of more interest rate cuts from the federal reverse in an attempt to stop a recession.
The euro has gained considerably over the pound in recent weeks as Britain has already began cutting the benchmark rate.
