MARKET REPORT : 19.12.2023

Published: 19/12/2023 By ECAP

The British Pound was on the back foot and struggles for a recovery as softer inflation data could prompt Bank of England policymakers to exit from “sufficiently restrictive” monetary policy stance and escalate hopes for more rate cuts in 2024. Whilst good for consumers and homeowners this would be negative for the Pound, as lower interest rates tend to reduce foreign capital inflows

The Euro gained some ground as ECB officials continued to push back against market expectations for a cut in key rates in the first half of next year. In fact, ECB policymaker Peter Kazimir said that the drop in inflation observed in the past few months was not enough to declare victory and move to the next policy stage.

The US Dollar held resilient against its major rivals yesterdays as more Federal Reserve policymakers rejected the idea of interest rate cuts as early as March. In fact, Cleveland Fed President told the Financial Times yesterday that markets were a 'bit ahead' of the Fed on rate cut expectations for 2024. Looking forward, in the absence of high-impact data releases, further comments from central bank officials could impact the dollar’s price action.

Data supplied by GC Partners