This afternoon Euro came through on their promises and actually raised the interest rate by 25 base points, a quarter of a percent. This as mentioned across www.eurorateforecase.com was widely expected by the market and had been widely priced in over the last 2 weeks. This resulted in very little change in exchange rates as the euro gained strength against the dollar and the pound following the confirmation.
The UK Bank of England (BOE) also released their interest rate decision earlier today with no change. As always it will be interesting to see the vote released in two weeks time in the meeting minutes as to who voted for what. This split between the 9 members will change speculation as to when the BOE will change rates.
Portugal confirms bail out
Late last night news broke that Portugal put their hands out and asked for a bail out. The concern is how much this will cost, initially it added to concerns that the interest rate would not change. Costs to the UK are being estimated as £3bn to £6bn. So we will watch as this story develops and changes the GBPEUR pairing. The key question will be whether they negotiate a package that will either temporally seal or stop completely the leak in their economy?