Bank of England, ECB cut interest rates

The euro and the pound were both weaker Thursday after both the European Central Bank and the Bank of England cut interest rates to historic lows, while the euro was further hurt by a ECB forecast that the Eurozone economy will contract by between 2.2 and 3.2 percent this year.

The ECB lowered Eurozone interest rates to 1.5 percent, a cut of 0.5 percent, while the Bank of England’s Monetary Policy Committee also cut rates by half a percentage point to 0.5 percent.

Analysts had forecast both rate reductions.

Meanwhile, the Japanese yen strengthened on declines in equities markets which reduced investor demand for risky currency trades that are often financed by the low-yielding yen.

In late morning trade in New York the US dollar traded at $1.253 to the euro and at $1.4075 to the pound while the yen traded at ¥123.274 to the euro, at ¥138.4729 to the pound and at ¥98.385 to the greenback.

The pound was down to 89.02p to the euro.

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