The pound appreciated across the board after Halifax house price index showed prices rising 4.5% in February, up from the 3.6% seen in January. The data set a trend for sterling to trade higher against both the euro and the dollar although EU GDP data did upset the trend slightly and gave the single currency a brief boost. EU GDP Q4 came out at 0.1% in line with expectation.

The Bank of England kept interest rates on hold at 0.5% and made no changes to their £200bln asset purchase scheme. Markets are not expecting the central bank to make any policy changes until much later in the year as they are still facing great uncertainty over UK economic stability and mixed data releases.

The European Central Bank followed suit not making any changes to their 1.0% interest rate, keeping rates steady. Following the decision ECB President Trichet indicated the central bank considered interest rate levels to be appropriate under the present economic conditions. He went on to say that the governing council felt market conditions were returning ‘progressively to normal’ and so would reduce liquidity in the markets as needed although they will continue to provide unlimited liquidity on a weekly and monthly basis in the short-term.

The dollar staged a rally in the afternoon as risk aversion returned on the back of weaker economic data. US pending home sales dropped 7.6% in January, the prior figures were also revised down to 0.8% in December.

Today markets await the release of US Non-Farm Payrolls which is expected to show the about market remaining weak.