Thursday will be the tale of two central banks.

With interest rates still at historical lows, further quantitative easing will almost certainly be on the agenda.

Remember, at the last meeting none of the MPC voted for a rate increase, this is down from three members a couple of months ago (although one of them, Andrew Sentence has subsequently left).

The voting preference at last time suggests worries over a stalling economy is increasingly dominating the rate setting meetings.

Sterling has remained under pressure after the three cent move against the Dollar on Tuesday stemming from the SNB intervention to stop the appreciation of the Franc.

The safe haven status of the Swissy has been checked somewhat by the intervention and the USD dollar has benefitted enormously from inflows.

We expect the market to test the resolve of the SNB at the 1.20 level over the coming days, which should lift Sterling but we keep around the 1.59 – 1.13 levels against both the USD and Euro for a lengthy period until the market is either satisfied that the SNB is serious about maintaining the peg or attempts to take on the bank and push the CHF back towards 1.10.

The ECB, in comparison to the BOE, does have room to cut interest rates and it is likely that they are considering doing so over the course of the next few months.

The betting was for another rise before the start of New Year, which is surely off the table given the deterioration in the world economy over the previous month.

The situation is complicated slightly by the arrival of a new ECB head before Christmas, who may want to gain a hawkish reputation early and do this by holding rates steady more than the market is forecasting, but the change in bias has definitely shifted from rate hikes to more of a wait and see which should translate into a slightly weaker Euro moving forward.

The Bank of England’s MPC minutes on interest rates were released this morning with no real surprises among the announcement.

The views on future inflation were largely the same as previous meetings with price rises being monitored closely while growth outlook suggested underlying gains in Q2 with some softening in Q3.

The overall opinion is that little has changed since June’s meeting and this was reflected with Sterling moving back to the levels it opened at this morning.

The Eurozone has another data light day today with most movements coming from investor opinions and sentiment.

The ongoing debt issues remain with the IMF and ECB still trying to hammer out a second bailout for Greece.

The US received some positive news last night with President Obama reporting that a proposal for cutting $3.7 trillion from the US government deficit including an immediate $500bn deficit reduction is edging closer to conclusion.

The cut would include both tax hikes and spending cuts with President Obama calling it a “significant step” in the crunch talks.

The news though will be overall negative for the Greenback as it may rule out a default (which was never going to happen), but it will mean having to print more Dollars and therefore, weaken the currency.

Wednesday saw both the Federal Reserve and Bank of England reveal details of interest rated decisions from recent meetings.

Three members voted against the proposition of holding rates – Andrew Sentance was joined by Martin Weale in voting for a rate increase with Adam Posen again the most dovish, voting for an extension to the QE program.

Merv spoke on Tuesday evening, outlining the banks view that we are in the midst of the largest squeeze on real incomes since the 1920’s, and that inflation is likely to stay above target for most of this year.

Just as we thought things were getting better!

Growing uncertainty over the UK economy is keeping Sterling in check against the Euro and Dollar and this is unlikely to change until we find out if the last quarter was just a blip on the continuing road to recovery or something much worse.

In the Feds case, the meeting was also yesterday, and again the Fed reassured the markets of the continuing economic recovery.

Again the Fed expressed concern over the labour market but the key point the markets will take from an otherwise as expected release is the continued lack of dissenters on the FOMC.

We will get the hard data supporting the Feds’ stance on Friday, when US 4th quarter GDP figures are released.

Although parts of America also suffered a prolonged cold snap in December, we are not expecting this to be used as an excuse for a disappointing number!

Uncertainty about Ireland’s debt crisis has helped support the dollar recently as markets remain focused on Ireland’s financial woes.

Currencies are see-sawing as year end book closing has prompted a lot of short dollar positions built up over the past couple of months to unwind, exacerbating losses in the euro.

The Pound could come under pressure should Ireland resist assistance given UK banks’ large exposure to the country.

Sterling edged up against the dollar and euro on Wednesday after an unexpected fall in jobless benefit claims and as the Bank of England showed it had held its three-way split at its latest policy meeting.

Data showed the number of Britons claiming unemployment benefit fell by 3,700 in October, the first fall since July and confounding expectations for a rise of 5,000.

Separately, minutes from the Nov 3-4 BoE Monetary Policy Committee meeting showed one member wanting more stimulus, another voting for a rate hike and the remaining seven keeping policy on hold and ready to act in either direction.

That was likely to reinforce expectations policy would remain on hold well into next year until the outlook for the economy became clearer.

Today is all about monetary policy meetings with the UK and the Eurozone committees all deciding on levels for interest rates for the next month.

For the MPC, that will be it for a week or so until the minutes of the meeting are released.

I would expect Andrew Sentance to once again prove to be the lone dissenter for leaving rates unchanged although it would be a shock if there was not evidence of protracted discussion amongst the members over the stubbornly high level of inflation and its effect on the UK economic outlook.

This is also the first meeting attended by Martin Weale therefore the minutes will also be awaited to discover his thoughts and voting intentions.

George Osborne has said that banks must increase lending to businesses rather than boosting bonuses and dividends now that they have weathered the worst of the credit crisis.

The statement comes in line with half-year figures released this week that are expected to confirm that the major institutions have returned to profit after two years of turmoil.

Lloyds Banking Group, which is 41% owned by the taxpayer, and the 84% state-owned Royal Bank of Scotland are both expected to post a profit. But Osborne questions the ability of British businesses to raise credit from the banks.

“The danger is that, particularly next year, when there is a huge amount of refinancing required, that the small and medium-sized businesses suffer from a lack of access to working capital,” he said.

Osborne continued that British banks “are in no doubt that the government wants to see reasonable access to credit on reasonable terms in the small to medium-sized business sector.”

The expected bank profits have boosted the recent Cable rally and we are now trading in the 1.58s and well on track to the key 1.60 psychological level.

As a result, leading European share indexes slumped about 3%, while US stocks fell more than 2% in morning trading.

The concerns also pushed the Pound to a new 19-month high against the euro.

The pound rose almost half a cent to 1.2389 euros, its highest level since the immediate aftermath of the financial crisis in November 2008.

Last summer, the ECB was forced to offer European banks cheap 12-month loans to help them through the financial crisis. This was a longer repayment term than the usual three to six months.

But the ECB has said it will not offer 12-month loans this time around, raising fears that European banks may again face funding difficulties.

So with heightened concerns about which banks still have bad loans on their books, there is a growing fear among investors about the health of the European banking sector.

The decision followed a crisis meeting in Brussels to discuss the financial turmoil that has raised doubts about the future of the euro.

It exposes the British taxpayer to £9.6 – £13 billion in liabilities should Spain or Portugal go the way of Greece.

Mr Darling had no choice but to surrender because the decision was taken under a Lisbon Treaty “exceptional occurrences” clause that stripped Britain of its veto.

Britain last night succeeded in staying out of an even larger fund solely for the 13 countries using the euro.

The EU agreed a £624 billion rescue package of bilateral “special purpose vehicle” loans for the 16 euro zone states struggling to finance their debts.

As well as the loans, an extra £52 billion of new cash for a “stabilisation mechanism” will be raised by allowing the European Commission to use the EU budget as collateral on international debt markets.

Britain escaped being sucked into the wider bailout loans but was forced to underwrite the “stabilisation mechanism” which, added to an existing “facility” of £43 billion, makes British taxpayers liable for £13 billion of a new £95 billion fund.

Already indebted euro zone states will be on standby with £382 billion of loans, which will be topped up by an IMF contribution of £191 billion).

The measures were rushed through over the weekend to be in place when the markets open today. Yesterday President Barack Obama urged EU leaders to restore confidence in their economies.

European stock markets and the euro have fallen and government bond yields have jumped as investors fear that the large deficits run up by some EU countries will cripple economic growth.

Mr Darling said Britain would not provide support for the single currency, but Sweden, another influential non-euro country, called that stance into question, saying it would “not rule out” being part of the wider fund.

Separately, the European Central Bank is later expected to announce that it will buy up Spanish and Portuguese government bonds at premium rates even if they are junked by markets.

Finance ministers meeting in Brussels endorsed the draft deal and agreed to provide a €110 billion (£96 billion) bailout loan, of which €80 billion would come from the eurozone member states and the rest from the IMF.

The package is almost certain to trigger more social unrest, of which the mayhem in Athens on Saturday, involving bitter fighting between protesters and police, was only a foretaste.

Militant public sector unions, seething over their biggest loss of power in decades, have scheduled the next general strike for Wednesday. Backed by the Communist Party and other left-wing groups, they have vowed a campaign of civil disruption for the indefinite future.

Angela Merkel, the German Chancellor, praised Greece’s “ambitious” new budget reduction plan yesterday and said that the loan was “the only way to ensure the stability of the euro”.

Her Finance Minister Wolfgang Schäuble said that Germany, which will have to provide the largest slice of the money — €8.4 billion in the first year — hoped to have legislation ready to enable its support by Friday.

George Papandreou, the Greek Prime Minister, announcing budget cuts of €30 billion for the next three years on top of reductions already agreed, told the Greek people that they would need to make big sacrifices but that “if we do not finance this debt Greece will go bankrupt”.

Andreas Papaconstantinou, the Greek Finance Minister, said: “The choice is between collapse or salvation.” He also warned that the bailout was necessary to prevent a financial “firestorm” spreading across Europe and destroying confidence in the euro.

Greece must redeem €8.5 billion of government bonds by May 19 but fears that the country will default has driven a sell-off of its bonds, effectively shutting the country out of bond markets.

Mr Papandreou said: “We have been able to convince our partners that the problem of Greece is not solely our problem — it also concerns the functioning of the markets. It concerns the protection of the euro.” His budget cuts are designed to bring the country’s huge budget deficit — 13.6 per cent of GDP last year — back to 2.6 per cent, below the 3 per cent EU limit, by 2014, two years later than originally promised. “These sacrifices will give us breathing space and the time we need to make great changes,” Mr Papandreou said. “I want to tell Greeks that we have a big trial ahead of us.”

Despite approval from the finance ministers, eurozone leaders must also give it their blessing, expected at a summit on Friday or Saturday. Parliaments of some member nations must also give their approval. European diplomats said that they expected the emergency funding to be unlocked by the second half of next week.

Salaries and pensions in the public sector in Greece will be frozen during the three-year programme and a fund backed by the IMF and the EU is to be set up to help Greek banks. VAT will rise from 21 per cent to 23 per cent and duties on fuel, cigarettes and alcohol will rise by 10 per cent. Early retirement will be curtailed.

Mr Papaconstantinou said that Greece’s public debt would soar to nearly 150 per cent of GDP — higher than forecast earlier — but would start falling from 2014. Athens would return to commercial borrowing when “appropriate”, he said.

Greece and its international backers hope that the deal can prevent the crisis from spreading to other troubled eurozone members, such as the Irish Republic, Portugal and Spain.

All three have had their debt downgraded recently by ratings agencies and could become targets for the market unless they swiftly implement tough new cuts agreed with the EU.

Ireland’s budget deficit last year, 14.3 per cent of GDP, was worse than that of Greece. Spain’s was 11.2 per cent and Portugal’s 9.4 per cent.

In Germany there is deep resentment about rescuing Greece, which hid the true size of its debts to enter the eurozone in 2001.

This plan would involve severe public spending cuts, tax hikes and the sale of state owned assets and will do nothing to improve the industrial unrest between the Greek government and its work force with further riots and strikes expected.

The yield itself rose to an eye popping 13.7% and 9.7%, for two year and ten year bonds respectively and placed the euro near a three month low against Sterling.

The fear now is that despite the €45 billion package this will not prevent the deficit from spreading across other EU countries such as Portugal- who were themselves downgraded by credit rating agencies yesterday.

That sentiment was evident yesterday as Portuguese bonds rose to 5.3% from 4.28% a fortnight ago. The overall unrest has caused similar scenes to Greece with one in four rail workers striking during the Monday morning rush hour.

Back to the UK and with a fortnight to go before the General Election and the hung parliament issue will not go away.

The latest YouGov poll’s place the Tory’s in pole position with an increase in their share of the vote to 34% who claim that they will reduce the UK’s overall debt quicker than both of its rivals.