Dollar Recoups Losses
In a move sure to affect the Interbank Forex market, the Dollar recouped the slight losses of Tuesday and gained against the British Pound. Many interbank Forex brokers are waiting for Thursday’s interest rate decisions by the Bank of England.
BOE to Cut Rates
Many interbank FX brokers expect the BOE to cut rates by at least 50 basis points to 1.0%. While the Pound fell against the Dollar it held steady against the troubled Euro on interbank forex markets. Interbank Forex brokers believe that global stock markets will affect the performance on interbank currency markets. Economist Geraldine Concagh of AIB Group stated, “What’s going on in equities is pretty much setting the tone for currencies and we saw the dollar sell off yesterday and sterling pick up some ground. But now there’s a bit of a reversal and sterling is moving into a defensive position ahead of tomorrow’s BOE rate decision.”
Pound Pummeled
The Pound was down 0.6% to $1.4386 after trading at $1.45 on Tuesday. Both the Euro and the Pound were lower against most major currencies on the interbank and retail forex markets and no movement in either currency is likely until both the Bank of England and the European Central Bank announce rate cuts. Interbank Forex brokers are also waiting for the US employment report due Friday.
UK Economy Expected to Contract in 2009
The UK based National Institute for Social and Economic Research predicted that Britain’s economy will contract at the largest rate in six decades and the BOE will have to do more than rate cuts to stimulate the British economy. Cuts in the onerous Value Added Tax have failed to produce the desired results and consumers remain wary.
Busy Week For Forex
This will be a big week for the interbank forex market. On Thursday both the Bank of England and the European Central Bank will announce rate cuts and other plans to fescue the troubled economies. On Friday the much awaited employment report from the United States is not expected to bring much good news. It will certainly be a busy week for interbank forex brokers.
