Money News Overview Thursday 21st December 2023: It’s beginning to look a lot like…rate cuts

The British Pound dropped swiftly following the release of UK inflation figures that were lower than expected, but there are reasons to assume that losses can be limited.

The unanticipated drop in headline CPI inflation to 3.9% year on year was the type of surprise that may significantly impact expectations for the UK economy and interest rates.

Markets anticipate the Bank of England to act quickly to lower inflation, with over 125 basis points of rate reduction expected in 2024, with the first cut priced in as early as March.

US Consumer Confidence Index increased more than expected in December. The index increased from 101.0 to 110.7, surpassing the 104.0 consensus. Existing-home sales unexpectedly increased in November. Both data reports raised expectations that the US economy will continue to thrive strongly in 2024. 

Today’s key data releases are from the United States, in the form of weekly unemployment claims and the Philly Fed Business Survey. However, unless there are any huge shocks, the figures are unlikely to have an impact on markets.

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