Today’s market attention is firmly on the States, with inflation data set to take centre stage. It is expected, CPI inflation will marginally fall to 2.3 percent (previous 2.5%) – investors have been anticipating this release to gauge the Federal Reserves future monetary policy stance.
The Federal Reserve began its rate-cutting cycle in September, beginning with a jumbo 50-basis point cut, which was the first rate cut in the United States since 2020.
US inflation is heading back towards the Bank’s target rate of 2 percent. Markets are now pricing in the likelihood that the Fed will cut interest rates by another 50 basis points until year-end.
Pound Sterling remains in a good position against both the Euro and Dollar. However, dovish comments from the Bank of England’s Governor ‘Andrew Bailey’ with regards to the BoE needing to be more aggressive with rate cuts has hindered GBP strength.
The Pound has continued to outperform this year against the other currencies in the G10, following robust economic growth.
Both GBPEUR and GBPUSD have remained relatively flat, showing little signs of volatility. This stability is largely due to a lack of significant economic data releases this week.
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