Market Report : 05.03.2024

Published: 05/03/2024 By ECAP

The British Pound clings onto recent gains as investors continue to believe that the Bank of England won’t lower interest rates anytime soon. The conviction is supported by the fact that the UK’s inflation rate remains the highest among G7 economies, forcing BoE policymakers to hold interest rates in restrictive territory for a longer period.

The European Central Bank is expected to keep the main refinancing rate steady at 4.5% at its March meeting on Thursday. Even though ECB President Christine Lagarde said that disinflation would persist, the central bank needs more evidence before lowering interest rates. Ultimately, investors will take more cues from the press conference as a less hawkish tone could exert some selling pressure on the Euro.

The U.S. Dollar steadied after seeing some volatility in recent sessions. While recent data showed some stickiness in U.S. inflation, investors appeared to have so far maintained their bets that the Fed will cut interest rates in June. However, this idea will be tested this week, with a two-day testimony from Fed Chair Jerome Powell – where analysts expect him to maintain his hawkish tilt.

Data supplied by GC Partners