The euro rose from the lowest level in almost three months against the dollar on speculation the currency will rally if the European Central Bank refrains from cutting interest rates today. The common currency gained versus all except one of its 16 major counterparts after Standard & Poor’s raised Portugal’s credit-rating outlook, saying European institutions will support the government’s financial-reform efforts. ECB President Mario Draghi will hold a press conference following the rate decision. The pound dropped to the lowest since July 2010 against the dollar before the Bank of England announces whether it will boost asset purchases to spur growth. “Our view is that the ECB will keep rates unchanged,� said Kasper Kirkegaard, a currency strategist at Danske Bank A/S (DANSKE) in Copenhagen. “While no change is the consensus view, the currency markets seem to have been pricing in a cut. If that doesn’t happen and Draghi doesn’t give an indication that there was a discussion of a cut, the euro� may extend gains, he said. The euro strengthened 0.5 percent to $1.3026 at 8:55 a.m. London time after falling to $1.2965 yesterday, the lowest level since Dec. 11. The single currency gained 0.3 percent to 122.31 yen after rising 0.2 percent yesterday. Japan’s currency rose 0.2 percent to 93.91 per dollar. The ECB will keep its benchmark rate at a record low of 0.75 percent, according to 56 of 61 economists surveyed by Bloomberg News. Five predict a reduction to 0.5 percent. The ECB announces its decision at 1:45 p.m. in Frankfurt and Draghi holds a press conference 45 minutes later. Economy Shrinks The ECB’s staff currently predicts the economy will contract 0.3 percent this year before growing 1.2 percent in 2014. Inflation is seen averaging 1.6 percent this year and 1.4 percent next year. S&P raised Portugal’s rating outlook to stable from negative, and affirmed the nation’s BB long-term sovereign credit rating in a statement released today. That’s two steps below investment grade, according to data compiled by Bloomberg. “The key really is that S&P is leading the other two ratings agencies with this move, so that, at the margin, helps with euro sentiment,� said Sue Trinh, a Hong Kong-based senior currency strategist at Royal Bank of Canada. The pound declined against all except one of its 16 major peers as 11 out of 39 economists surveyed by Bloomberg predict the Bank of England will boost its asset-purchase target to at least 400 billion pounds ($600 billion) when it meets today. The remainder forecast no change. The U.K. currency fell 0.1 percent to $1.4997 after dropping to $1.4967, the weakest since July 2010. Sterling depreciated 0.6 percent to 86.85 pence per euro. BOJ Meeting The yen rose against the dollar after the Bank of Japan (8301) kept its asset-purchase program at 76 trillion yen, in line with estimates of economists surveyed by Bloomberg. Haruhiko Kuroda, Prime Minister Shinzo Abe’s nominee to succeed BOJ Governor Masaaki Shirakawa this month, has said he will do whatever it takes to end 15 years of deflation. Nomura Securities Co. reduced its forecasts for the yen. Japan’s biggest brokerage estimated the yen will end 2013 at 93 per dollar from a previous estimate of 90, while it will be at 95 in June from 90 previously. “It’s becoming clear that powerful monetary easing by the BOJ under Kuroda would support yen weakness,� Yunosuke Ikeda, Nomura’s head of foreign-exchange strategy, wrote in a report today. “Overseas expectations for Abenomics is high.� Japan’s currency has fallen 1.6 percent in the past week, the worst performer among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The euro dropped 0.2 percent and the dollar was little changed. To contact the reporter on this story: David Goodman in London at dgoodman28@bloomberg.net To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net

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