The European Central Bank lowered the benchmark interest rate by 25bp to a record-low of 1.25% despite expectations for a 50bp cut, and the move by the central bank reinforces President Trichet’s reluctance to overshoot the interest rate even as the outlook for growth and inflation falters.
[B][U]Fundamental Headlines
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[B]EURUSD –[/B] The European Central Bank lowered the benchmark interest rate by 25bp to a record-low of 1.25% despite expectations for a 50bp cut, and the move by the central bank reinforces President Trichet’s reluctance to overshoot the interest rate even as the outlook for growth and inflation falters. Comments by the central bank head at 12:30 GMT could indicate what the ECB has in store as the economy faces a deepening recession however, as the board struggles to meet on common ground, Mr. Trichet could signal that rates would only go lower, and may fail to touch upon what the central bank plans to do as the rate falls close to zero. Discuss the topic and your trade ideas in the EUR/USD Forum.
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GBPUSD –[/B] Home prices in the U.K. unexpectedly rose for the first time since October 2007 as the Nationwide index increased 0.9% in March, while the annualized reading improved to -15.7% from -17.6% in the previous month. In addition, the construction PMI increased to 30.9 from a record low of 27.8 in February, and the data suggests that the markets are beginning to stabilize as the government takes unprecedented steps to steer the economy out of the recession. Despite the improved data, the outlook for growth and inflation remains bleak as households face a weakening labor market paired with tightening credit conditions, and growth prospects for the U.K. are likely to deteriorate further as the region faces its worst economic downturn in over half a century. Discuss the topic and your trade ideas in the GBP/USD Forum.
