Market Report : 18.01.2024

Published: 18/01/2024 By ECAP

The British Pound recovered swiftly as stubbornly high UK inflation data for December has pushed back expectations of early rate cuts by the Bank of England. BoE policymakers are expected to remain on their toes as the UK economic outlook is vulnerable and price pressures are significantly stubborn.

The Euro was on the back foot even though ECB President Christine Lagarde stated that there would be support among ECB officials for an interest rate cut in the summer, later than market expectations for a spring cut. Looking forward, market participants will monitor the ECB Monetary Policy Meeting Accounts and ECB President Lagarde's speech later today.

The U.S. Dollar stood near a one-month high as strong U.S. retail sales data spurred more doubts over early rate cuts by the Federal Reserve. In fact, retail sales data coupled with stronger CPI inflation and nonfarm payrolls readings for December gives the Fed more headroom to keep rates higher for longer. Ultimately, investors are now pricing in a 61.8% chance for a 25-basis point cut in March, down from a 67.3% chance seen a week ago.

Data supplied by GC Partners