Market Report : 18.09.2024

Published: 18/09/2024 By ECAP

Waning Optimism

The British Pound edged slightly higher this morning, following the release of UK inflation data. In fact, core CPI rose by 3.6%, more than the 3.5% estimated and accelerating from 3.3% in July. Ultimately, this acceleration in inflation could force investors to pare back bets supporting one more interest rate cut by the Bank of England in the remainder of the year.

The Euro was rangebound during most of yesterday’s trading session as a sharper than expected decline in Germany’s ZEW economic sentiment index revealed that economic morale in Europe’s powerhouse tumbled to its lowest level since October 2023. This marks the third consecutive monthly drop in economic sentiment. Ultimately, waning optimism in one of the bloc’s key economies serves to cast a shadow over the single currency.

The U.S. Dollar retreated this morning as markets positioned for a widely expected interest rate cut by the Federal Reserve later in the day. However, market participants are somewhat split over just by how much the Fed will cut rates. In fact, investors were seen pricing in a 64% chance for a 50 basis point cut and a 36% chance for a 25-basis point cut.

Data supplied by GC Partners