The sterling/euro price closed relatively unchanged yesterday as both the MPC and ECB held rates.

Sterling was unable to build on Wednesday’s gains, as trading between the pair held steady following a relatively muted market response from the two interest rate statements.

• Yesterday morning, the pair remained tightly range bound as investors held back from taking positions ahead of the rate statements from the two central banks.
  
• Analysts noted that people had taken sterling a lot lower recently and maybe now they were beginning to think that the BoE would not extend quantitative easing
  
• At midday it was revealed that the BoE did decide to hold both the interest rate and the asset purchase scheme at their current levels.
  
• However, sterling was unable to build on an intra-day high of 1.0916, as ECB President Trichet avoided seeming too dovish over the eurozone’s recovery.
  
• Trichet did speak of the need to be “prudent and cautious” over the coming months, but he acknowledged that the eurozone economy was stabilising, recovering at a gradual pace, which enabled the single currency to rebound in the afternoon.