Speculation continues on possible ECB rate cuts

The euro was once again affected on Thursday by speculation about whether or not interest rates will fall.

This was especially after Sweden dropped its interest rates on Tuesday and after Wednesday’s release of Bank of England meeting minutes that showed two monetary policy committee members had voted for a UK interest rate cut earlier in the month.

Despite all the talk, European Central Bank officials are still standing by their contention that calls for rate cuts are “unhelpful” and that current levels are not interfering with investment.

The euro lost 0.7 percent to $1.2047 in relation to the US dollar.

Meanwhile, sterling gained 0.4 percent to £0.6629 in relation to the euro, but it fell 0.2 percent against the US dollar to $1.8181 as a report from the Confederation of British Industry said that industrial orders were at their lowest level in 20 months while inventories are high.

Industry’s problems stem from several factors, including high prices for commodities ranging from oil to metals, low demands in the eurozone and UK, and strong international competition.

The yen was also weaker against the US dollar, falling 0.2 percent to ¥108.88.

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