Published: 01/08/2024 By ECAP
The British Pound was relatively flat as markets await today’s BoE meeting. Signs that inflationary pressures are receding globally have been fuelling speculations that the UK central bank will cut interest rates. In fact, financial markets are pricing in over a 65% chance that the BoE will lower rates from a 16-year high of 5.25%. Investors, however, are far from certain that the BoE will act immediately as services inflation in the UK remains uncomfortably high.The Euro held its ground as inflation in the eurozone rose again in July, raising doubts on a potential ECB interest rate cut in September. In fact, yesterday’s data released by Eurostat showed that the preliminary estimates of the Harmonised Index of Consumer Prices in the Eurozone rose by 2.6% YoY in July, compared to 2.5% in the previous month.
The U.S. Dollar was nursing steep losses after Federal Reserve Chair Jerome Powell said that a September rate cut was possible on more encouraging inflation and labour market data. In fact, his comments saw markets almost entirely pricing in a 25-basis point cut in September, along with a small chance of a 50-basis point cut.
Data supplied by GC Partners