Both Bank of England and the European Central Bank acted as expected today during their monetary policy meetings BoE cut the interest rate to 5.00% and ECB left them unchanged at 4.00%.
Facing the problems in the housing and the financial sectors of the economy, the Bank of England, decided to lower the interest rate from 5.25% to 5.00% today. Relatively low inflation allows them to use the interest rate cuts as the main tool to stimulate the economic growth.
The European Central Bank is facing almost the same problems as its British colleagues slower growth and the overvalued euro. Unlike BoE, ECB abstained from cutting the rate due to the elevated inflation in the Eurozone. But market analysts are confident that the reducing cycle should start for ECB soon.
EUR/USD managed to reach the new absolute maximum at 1.5913 today before the ECB meeting, but as of 12:54 GMT is trading near its open price at 1.5842. GBP/USD also was very bullish before the banks meeting today, but reversed almost a half its growth right after the rate decision became known.
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