ECB holds interest rates steady at 1%

The European Central Bank has kept key interest rates unchanged, in line with market expectations, keeping eurozone borrowing costs to historic low levels.

After cutting rates twice in the last few months, the ECB’s policy setting governing council voted to hold the rates at 1%.

Earlier in London, the Bank of England also kept the interest rate steady at a record 0.5% and announced it would inject another £50 billion into the struggling UK economy.

The market was prepared for the ECB’s decision, which prompted little reaction in the euro, which rose 0.3% to around $1.3290, having earlier hit a high of $1.3313, its strongest since mid-December.

Investor focus will switch to ECB president Mario Draghi's news conference later in the day.

Some analysts are expecting an optimistic tone from Draghi on the back of improvements in eurozone purchasing managers' data as the ECB's liquidity measures filter through the system.

In the UK sterling rose after the Bank of England announcing it would hold rates, climbing around 0.4% to a session high of $1.5872 against the dollar, and rising against the euro to 83.50 pence.