Market Report : 14.12.2023

Published: 14/12/2023 By ECAP

The British Pound came under pressure this morning, courtesy of two softer than expected UK data releases that prompted markets to 'price in' over 100-basis points of UK rate cuts in 2024. In fact, analysts anticipate that the negative growth data will cement today’s BOE expected hold on rates but might raise the odds of rate cutting sooner in 2024 as the Bank seeks to avoid sending the economy into recession.

The Euro gained some ground against a basket of currencies in the overnight trading session as market participants look to the ECB. The upcoming monetary policy meeting of the European Central Bank is widely expected to maintain rates unchanged. However, market attention is keenly focused on the ECB's guidance for 2024, particularly any indications regarding the potential timing of interest rate cuts.

The U.S. Dollar dropped to a fresh four-month low last night after the Federal Reserve's latest economic projections indicated the interest-rate hike cycle has ended and lower borrowing costs are coming in 2024. In fact, policymakers were nearly unanimous in their projections that borrowing costs would fall in 2024. Ultimately, markets are now pricing in around a 75% chance of a rate cut in March, according to Fed-Watch tool, compared with 54% a week earlier.

Data supplied by GC Partners