The Bank of England is expected to release its decision regarding its interest rates for the current month of on 5 December 2013. At this time, many experts do not foresee any changes to the rates emerging from the central bank.
Readers are reminded that the interest rate decision by the central bank can have a significant effect on the nation?s currency and economy in that it influences borrowing and spending activities through providing investors either positive or negative incentives to put their money out into the economy.
Analysts note that the UK has made significant progress in rebounding from the recession. Proof of this positive movement in the economy can be seen in the continued rise in housing prices which have risen steadily in recent months. Analysts believe that the relatively low interest rates have been a key factor in helping to spur growth in the economy as lower rates allow for cheaper borrowing costs.
While analysts do not expect the release of the report itself to significantly affect the pound in trading, the statement from the Bank of England that generally accompanies the report may influence the currency in the coming weeks. As previously noted, these remarks generally touch on where the board members of the policy making committee see the economy moving and provides some added insight into what steps they may take to influence the markets.
Rate Decision for Eurozone to Come Out on Thursday
The European Central Bank is set to issue its own Rate Decision tomorrow 5 December 2013. Currently, many experts do not predict to see any changes from the low rates that were previously issued.
As noted above, any adjustments made to the interest rate can have a significant impact on the currency itself and on the economy. This rate is often used by central banks to control growth levels by influencing the desirability for borrowing money. As rates become lower, it becomes more attractive for consumers and companies to borrow money since it is cheaper. Should the bank see that inflation is moving out of its intended parameters, it can reign it in by raising rates.
It should be noted that ECB President Mario Draghi is expected to hold a press conference following the rate announcement. While analysts do not believe that the ECB intends to cause any shifts to its rates, the fact that Draghi has decided to make public statements so soon after the release of the rates is somewhat concerning. The ECB is generally known for its transparency in its decision making process, thereby allowing investors to become aware of possible changes to their policy. That said, Draghi`s decision to issue remarks could hint at his intention to introduce a new plan or direction for the bank.
Analysts note that while the release of the report is unlikely to significantly influence the Euro in trading, Draghi`s comments at the press conference will likely cause waves. Traders should expect some volatility to follow and adjust accordingly.
American GDP and Consumption Reports to be Released
The US is set to release two reports tomorrow, 5 December 2013. The first covers the Gross Domestic Product for the third quarter of the year (Q3) while the second details the Personal Consumption during the same period of time. At this time, many experts believe that there will be a slight rise in the GDP report in comparison with that of the second quarter (Q2). Meanwhile, rates for Personal Consumption are expected to stay the same.
Analysts remind readers that the GDP is the combination of a country`s consumption, investments, government spending and the difference resulting from comparing exports and imports. As such, it provides economists a snapshot of how a country is progressing over a given period of time.
As has been previously noted, the fact that consumer spending comprises nearly two thirds of the economic activity in the US means that Personal Consumption rates are important indicators for observers.
Analysts do not believe that these reports will have any significant influence on the USD in trading, as they are reporting on what is essentially older news. The fact that the USD has enjoyed a number of positive reports recently including the ISM`s manufacturing report which came in higher than expected should help to boost the dollar`s value in trading.