ECB interest rates

During what is likely to be a very busy day on the foreign exchange markets today by far the outstanding release will be the interest rate announcement by the European Central Bank.

Expectations are that levels will remain on hold at 1% and anything other than that will rock the markets with an increase likely to cause significant strength for the single European currency and a cut (the least likely scenario) having the opposite effect with currencies gainning signifcant ground.

The forecast is that at some point soon the ECB will begin to increase the cost of borrowing, especailly as they are now officially out of recession. The liklihood is that this will be significantly sooner than the Bank of England raise rates in the UK. Over time this may well see the Euro keep gaining against the Pound, potentially, as Buzz Lightyear once (kind of) said "to parity and beyond!!!"