Published: 12/01/2024 By ECAPThe British Pound gained further traction as data released earlier today showed that Britain's economy grew slightly more than expected in November. In fact, the country’s GDP rose 0.3%, beating forecasts for a 0.2% expansion. Moreover, industrial and manufacturing production both expanded in November, raising hope that the country’s economy, one of the weakest in Europe, is now on track for growth.
The Euro was under pressure yesterday possibly due to remarks made by ECB President Christine Lagarde stating that the most challenging phase was likely behind, and interest rates would be reduced if the ECB had a certainty that inflation had declined to the 2.0% level. Lagarde also added that interest rates in the eurozone had reached their peak after a rapid increase in response to high inflation last year.
The U.S. dollar took little support from overnight data that showed U.S. CPI inflation grew slightly more than expected in December. This, coupled with recent signs of resilience in the labour market, gives the Fed less impetus to begin trimming rates early. However, investors appeared to have increased their bets that the Fed will begin cutting rates by as soon as March, pricing in a 70.2% chance for a 25 basis point cut.
Data supplied by GC Partners