Today brings a mix of Eurozone Purchasing Managers Index (PMI) data, to help assess the performance of the manufacturing sector. Attention will be on whether these figures show contraction or expansion.
Early this morning, figures in the UK revealed that business confidence plummeted in September, as business leaders nervously await details of Labours first budget. Optimism fell to its lowest level since 2022, with the index dropping to -38 in September, down from -12 in August.
Later this morning, Eurozone inflation will be closely monitored. In August, the change in the price of goods and services fell to 2.2 percent, and if today’s release moves closer to the Bank’s target of 2 percent, it may prompt the European Central Bank to consider reducing interest rates. A continued decline would suggest inflationary pressures have eased.
ECB’s Lagarde has recently voiced she expects that the Eurozone will remain tight until inflation drops – so if inflation falls today, it will raise the likelihood of an October rate cut.
Yesterday evening, the Fed Chairman ‘Jerome Powell’ spoke on the US economy. He signalled that the Federal Reserve are likely to reduce interest rates in smaller proportion rather than a jumbo 50 basis point rate cut, as seen in their last monetary policy decision.
Jermone Powell’s comments showed signs of support for the Dollar – pushing GBP/USD & EUR/USD to weekly lows.
The pound remains bullish and continues its recent good form into the week.
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.