Keith Spitalnick

Regional Manager - Spain

Currencies Direct

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As expected, the ECB raised its base rate by 25 bps to 1.5% as it tries to curb rising inflation. The rise will add pressure to some of the single currency’s members, including Greece which remains in deep recession.

Meanwhile, the Bank of England’s monetary policy committee held Britain’s base rate at 0.5% despite inflation recently climbing to 4.5% - more than double the Bank’s 2% target. This has been driven higher by the rising cost of essential items such as food and fuel. A rate rise could help to bring inflation down towards the target, however analysts praised the move saying “stability was key to the country’s recovery”. The BoE has warned that inflation will rise above 5% later this year and remain above target through 2012 before dropping off in 2013.

Yesterday brought strong US jobs data and the positive figures were welcomed in the US which has seen its economy hits the skids recently. Weaker data paired with an ever growing debt pile have seen the Greenback slide over the last 3 months. This week though has seen a revival in the Dollar as investors look for the safe havens to avoid the ongoing debt issues. The better than expected jobless claims boosted it even further and with the non farm payrolls due out at 1.30pm, we could be set for another positive number for the US employment sector.