LONDON - The euro held steady on Thursday as the European Central Bank kept interest rates on hold, while the pound rose versus the greenback as the UK central bank raised its asset buying but less than some expected. The ECB kept interest rates at a record low 1.0 percent. Markets now await ECB President Jean-Claude Trichet’s news conference at 1330 GMT on any clues for a withdrawal of the central bank’s easing measures.
By 1259 GMT, the euro was flat on the day against the dollar at $1.4867, little changed from before the ECB’s decision, which was widely expected. The euro had pared earlier losses against the dollar after hitting a session low of $1.4810.
Sterling jumped more than a full cent to hit a two-week high against the dollar after the Bank of England expanded its asset-buying scheme by 25 billion pounds.
Two-thirds of analysts had predicted the BoE would expand its asset-buying scheme, but opinion had been split on whether the increase would be 25 billion or 50 billion pounds.
The BoE, which also left interest rates unchanged at a record low of 0.5 percent as expected, said the bond-buying would take another three months to complete and analysts said that would probably mark the end of the programme.
“The Bank seems to be weaning the market off QE and we strongly suspect that — barring any further negative surprises to economic growth — this will be the last instalment of the programme,” said George Buckley, economist at Deutsche Bank.
Sterling was up 0.2 percent at $1.6611 after rising to $1.6637. The euro fell more than half a pence to the day’s low of 89.34 pence.
Market players will also watch whether Trichet goes beyond previous comments on the euro before a gathering of Group of 20 finance ministers this weekend.
“Ahead of the weekend’s G20 meeting we don’t expect the ECB head to say anything more than the usual support for U.S. policymakers desire for a strong dollar,” Calyon analyst Stuart Bennett said in a note to clients.
The central bank decisions in Europe come in the wake of that of the U.S. Federal Reserve, which on Wednesday kept its commitment to low borrowing costs for an “extended period”, and held borrowing costs near zero as expected.
The dollar initially fell as investors bought into riskier assets, reassured that the Fed would keep rates low and liquidity flowing, but then reversed as market players took profits on risk assets.
The yen was broadly higher as investors took profits on gains in cross yen pairs. The euro was down 0.3 percent at 134.42 yen. The dollar was down 0.3 percent at 90.39 yen.
U.S. weekly jobless claims data are due out at 1330 GMT ahead of closely-watched U.S. non-farm payrolls data on Friday.
