EURUSD Little Changed After ECB; GBPUSD 0.2% Shy Jump on BOE

by on August 7, 2014 11:19 am BST

EURUSD was about 0.3 percent from a nine-month low as the ECB kept interest rates unchanged before its President Mario Draghi holds a press conference in Frankfurt to discuss monetary policy.

EURUSD was little changed at $1.3378 at 12:49 p.m. London time after sliding to $1.3333 yesterday, the weakest level since Nov. 8. It rose less than 0.1 percent to 136.76 yen. Japan’s currency traded at 102.24 per dollar.

Draghi will hold his press conference at 1:30 p.m. London time.

The euro has weakened 4.4 percent versus the dollar since May 8, when Draghi signaled policy makers would ease monetary policy the following month if needed. It extended losses since June 5, the day ECB policy makers lowered the refinancing rate and moved the deposit rate below zero for the first time.

The policy meeting comes against the backdrop of mounting political crisis. Russia has massed troops along its border with Ukraine and President Vladimir Putin retaliated yesterday against European Union and U.S. sanctions by ordering restrictions on food imports.

GBPUSD was about 0.2 percent from its weakest level in eight weeks versus the dollar after BOE officials maintained their key interest rate at a record-low 0.5 percent following a two-day meeting.

Following the BOE’s decision, GBPUSD traded at $1.6840 after touching $1.6814 on Aug. 4, matching the lowest since June 12.

U.K. 10-year government bond yields dropped to the lowest in almost a year. Officials have been united in voting to leave policy unchanged since Governor Mark Carney’s first Monetary Policy Committee meeting in July 2013. The BOE will update its economic forecasts next week while a separate report will show unemployment fell in the three months through June, according to a separate survey of economists.

The pound was little changed at $1.6840 as of 1 p.m. London time after touching $1.6814 on Aug. 4, matching the lowest since June 12. Sterling was at 79.43 pence per euro. from 79.40 pence yesterday.

The pound has weakened 0.2 percent in the past month. In the past year, it was the best performer, gaining 9.9 percent as investors brought forward bets on the timing of the BOE’s first increase in interest rates since 2007.