Market Report : 03.07.2024

Published: 03/07/2024 By ECAP

The British Pound struggles to gain further ground as the backdrop of the Bank of England's dovish pause in June and market jitters surrounding the upcoming UK general elections acts as a headwind. Nevertheless, the UK economy is expected to strengthen, which can prevent the Bank of England from cutting interest rates as fast as previously expected.

The Euro continues to trade without any clear direction as yesterday’s preliminary Eurozone Harmonized Index of Consumer Prices eased to 2.5% in June from 2.6% in May. However, these inflation reports are unlikely to encourage the European Central Bank to cut interest rates again at its next policy meeting on the 18th of July.

The U.S. Dollar lost some ground yesterday as Powell flagged some progress in bringing down inflation. However, losses in the dollar were limited given that Powell also warned that the Fed still needed more confidence to begin cutting interest rates. Powell’s comments came before more key signals on U.S. monetary policy and the economy this week. The minutes of the Fed’s June meeting, along with more addresses by Fed officials, are due later today.

Data supplied by GC Partners