Published: 12/12/2023 By ECAP
The British Pound dipped as an initial reaction to news UK wages cooled in October, but downside risks to the currency are limited as these data are unlikely to shift the Bank of England's policy stance on Thursday. Wages are a key component of domestic inflation, and the Bank of England judges that at current levels, they remain too high to be consistent with a fall in inflation back to the 2.0% target.The Euro was still on the back foot as investors focus on the ECB monetary policy meeting, which is likely to hold its Deposit Facility Rate unchanged at 4.0%. In fact, Eurozone inflation came in at 2.4% in November, the lowest level in more than two years. Ultimately, the easing in inflationary pressure in the Eurozone fuels the bet for rate cuts early next year.
The U.S. Dollar steadied after recent gains as investors hunkered down before key U.S. inflation data and tomorrow’s Federal Reserve meeting. Consumer price index data is due later in the day and is expected to show that inflation eased slightly in November. However, investors remained wary of a stickier reading, especially after nonfarm payrolls data released last week beat expectations.
Data supplied by GC Partners