The euro fell against sterling which surged after the UK central bank cut rates by 50 basis points but was little changed against the dollar today after the European Central Bank held its rate at 2 per cent.
ECB President Jean-Claude Trichet had flagged that no rate move would happen at this meeting but hinted the central bank may resume its monetary easing cycle in March, and markets will be looking for clues as to the size of the next move.
The BoE's rate decision put UK interest rates at 1 per cent, compared with euro zone rates at 2 per cent.
"If the BoE has got to the bottom of its rate cutting cycle and there's still room and expectation that the ECB will cut further, then interest rate spreads will be reduced in terms of the negative spread versus sterling," said Rabobank strategist Jeremy Stretch.
At 12.58pm, the euro was up 0.1 per cent against the dollar at $1.2844, but eased from $1.2858 just before the ECB's decision.
The euro shed gains against the yen at 115.08 yen while it was down more than one percent against sterling at 87.72 pence, almost a two-month low.
Sterling jumped to a 2-week high versus the dollar after the BoE's rate cut to a record low of 1 per cent, as expected.
Reuters