Monthly Archives: September 2024

Yesterday, the Bank of England maintained the bank rate at 5%, as predicted. The MPC voted 8-1 to keep interest rates unchanged, with one member supporting a 25 basis point drop.

The Monetary Policy Committee is reviewing a mixed bag of data, with headline inflation generally close to its 2% objective, but price increases in services, which are responsible for around 80% of the UK economy, edged up to 5.6% in August. Wage growth in the United Kingdom fell to a more than two-year low in the three months to July, but remained quite strong at 5.1%

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Elsewhere, markets were upbeat as analysts digested the Fed’s decision to slash interest rates by a whopping 50 basis points. Meanwhile, the BoJ chose to leave policy on hold overnight, as expected. The market’s reaction to the decision was modest.

Yesterday, the dollar experienced some downward pressure. At the same time, sterling had a firmer tone.

Already this morning, UK retail sales rose by 1% in August (compared to +0.4% forecast). Sterling has taken the lead in early trade following the release. Later today, the big feature will be the flash reading of Eurozone consumer confidence in September.

For additional insights on how this could affect your business or to capitalise on market volatility – please reach out to speak to one of our experts.

Yesterday’s macro diary was data-driven and focused on the United States. Headline retail sales for August exceeded estimates, and several of the key underlying statistics were also positive.

US industrial production for August again exceeded expectations, despite downward revisions to previous months. Meanwhile, homebuilder sentiment in September followed yesterday’s trend of consensus outperforming US statistics.

The dollar was not much impacted by the strong US macro newsflow. The majority of the FX majors remained inside very narrow ranges, however, sterling has taken on a slightly softer tone in the last 24 hours.

This morning, the UK CPI inflation numbers for August were revealed. The headline CPI maintained at 2.2%, while the core CPI came in slightly higher than expected at 3.6% (vs. 3.5% forecast).

Looking ahead, the previously mentioned Fed rate decision (after the European close) is a major focus for markets and carries significant event risk for the dollar. The Fed has indicated that it will lower interest rates today.

However, there is some uncertainty over the size. In recent days, there has been talk that the Fed may opt for a 50bps cut rather than a 25bps one. Aside from the rate announcement, Fed Chair Powell’s press conference will be eagerly watched.

For additional insights on how this could affect your business or to capitalise on market volatility – please reach out to speak to one of our experts.

Today’s key economic event is the release of the U.S. Retail Sales report. Markets anticipate a decline in sales month-on-month, expecting a drop to -0.2%, down from last month’s 1%. This report is closely watched as it provides insight into consumer spending trends.

Once the U.S. Retail Sales report is out, attention will shift to the UK on Wednesday, when the country is set to release its inflation figures. The forecast indicates no change, with inflation expected to hold steady at 2.2%. This data is crucial, as it will influence the Bank of England’s interest rate decision on Thursday.

The most anticipated event this week is the U.S. Federal Reserve’s interest rate announcement on Wednesday evening. Markets are currently pricing in a 50 basis point cut, which could have significant implications for the global economy.

In anticipation of this announcement, the pound has strengthened against the U.S. dollar. However, further volatility is expected around the release of the Federal Reserve’s decision, which could lead to notable market movements.

Meanwhile, the pound-to-euro exchange rate has remained relatively stable, showing little fluctuation despite ongoing market developments. This stability contrasts with the pound’s movement against the dollar.

A quiet start to the week with only the NY Fed Empire State Survey due.

The focus this week will be both the US fed policy announcement and the Bank of England policy announcement on Thursday.

It is widely expected the Bank of England will leave the headline rate at 5 percent, but it will be the comments that follow that will garner a lot of attention.

Before the Bank of England policy announcement on Thursday, we have the UK inflation figures on Wednesday.

If UK inflation comes in lower than expected, we could see the pound weaken off slightly.

Wednesday is a big day for markets, as we will see the Federal Reserve finally cut interest rates and likely signal that there are more to come.

On Friday, we have the UK Retail Sales figures due followed by the EU consumer confidence numbers to cap off a busy week.

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For additional insights on how this could affect your business or to capitalise on market volatility – please reach out to speak to one of our experts.