Market Report : 08.08.2024

Published: 08/08/2024 By ECAP

The British Pound has seen limited gains as the increased risk aversion linked to escalating Middle-East tensions seems to have led investors to shy away from risk-sensitive currencies. Moreover, sterling has been restrained from the heightened expectations of BoE delivering another 25-basis point rate cut at its next meeting. Ultimately, market expectations now include the possibility of two more quarter-point rate cuts by the BoE by December.

The Euro has rallied to three month highs against the British Pound and has been holding its ground against the U.S. Dollar as investors await the release of Germany's Harmonized Index of Consumer Prices on Friday. Market expectations are steady, with forecasts of a 2.6% year on year increase and a 0.5% month on month rise.

The U.S. Dollar continued its retreat amid persistent concerns over a U.S. recession and falling interest rates. In fact, the Fed is widely anticipated to implement a more aggressive rate cut in September. According to the CME Fed Watch tool, there is now a 72% probability of a 50-basis point interest rate cut in September, up from 11.8% a week earlier.

Data supplied by GC Partners