The euro is facing a challenging period, due to widening sovereign bond spreads and a difficult funding schedule. Euro zone government debt markets have become unsettled in recent trading as Portuguese 10 year bond yields hit record levels, sparking fresh worries regarding financing costs in peripheral Euro zone countries.

Axel Weber, Bundesbank chief, a well known European Central Bank hawk, shall not replace Trichet as president of the European Central Bank, according to reports, which has added to concerns that Euro zone interest rates will increase in the future.

Elsewhere in the FX markets, the US dollar has benefited as a result of a spate of American economic figures in recent market trading, suggesting that a recovery is under way. Most analysts are looking for more out performance for the US dollar.

If you are trading in the forex markets with companies such as IG Markets then be aware of any rates rises. The BoE kept its key rate at a record low of 0.5 per cent, arguing that the threat of increasing inflation will be temporary & that the UK's economic recovery remains fragile.

Surprise figures recently showed The UK's economy contracted towards the end of 2010. Headwinds from tax rises & government spending cuts look set to trouble the economy for some time.

Analysts had predicted a steady rate outcome, nevertheless money markets did price in around a 20 per cent chance that interest rates would climb to 0.75 %. The Bank's decision to keep rates consistent will be a relief to the government, who will be hoping that loose monetary policy will support the economy during its fiscal tightening.

Nevertheless, it will also increase criticism that the UK's central bank is overlooking its price stability responsibilities. Inflation has come in at over a percentage point higher than its 2 per cent target price for the past year & it looks set to rise even higher as recent surges in crude oil & commodities prices feed through.

Mervyn King, Bank of England Governor, warned recently that inflation could rise high as 5% in the coming months. Nevertheless, he repeated his stance that it would be back within target by early 2012, due to slack in the economy & the absence of further inflationary factors such as last month's climb in VAT.

Contracts for Difference Trading and Financial Spread Trading do involve high levels of risk to your investment capital. The margin on these forms of investment does mean that you can lose more than the capital you initially committed. If you are investing with CFD Trading and Financial Spread Trading, you should make sure that you always invest using money that you can afford to lose; always make sure that you recognise the risks involved when investing with these investment products. Please note that Financial Spread Trading and CFD Trading might not always be suited to your investment requirements. Where appropriate, seek independent investment advice.