26 October 2001, 15:22  Forex - Euro slightly weaker in midday London trade on ECB comments

LONDON (AFX) - The euro was slightly weaker from morning levels in midday trade under some pressure from recent statements by European Central Bank heavyweights Ernst Welteke and Jean-Claude Trichet, which were interpreted as pushing forward the timing of any rate cuts, dealers said. Ernst Welteke's said insufficient conditions exist for a rate cut while Trichet reiterated that the ECB takes its interest rate decisions "quite independently" of outside influences. "If anything, the weakness is a reflection of ECB comments which indicate that it is in no rush to cut rates and show that the ECB's view on the economy is very different than the markets. So it is very difficult to say when it will cut," Jeremy Hawkins, chief economist Europe at Bank of America said. "Only the large drops in the US economic data yesterday is keeping the euro from falling further," he added. Peter Thomas, head of spot forex trading at Deutsche Bank said trading was very quiet. "I don't think that the euro will test the lows seen yesterday or the highs at least until the release of the US data this afternoon," he added. "The ECB disappointed again and the euro would fall if the US data weren't so weak," Thomas said. Sterling was higher against most major currencies after the release of stronger-than-expected GDP data, dealers said. "Clearly the GDP data remains strong and the UK economy was outperforming prior to the terrorist attacks which should put it better placed to withstand the global slowdown," Hawkins at Bank of America said. "Only talk about an EMU referendum is keeping it down," he added. UK GDP -- at constant 1995 market prices -- rose 0.6 pct in the third quarter compared to the previous quarter, leaving it 2.2 pct higher year-on-year.

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