Published: 21/12/2023 By ECAPThe British Pound is struggling to find a firm footing as a sharp drop in the Consumer Price Index for November has deepened expectations of early rate cuts by the Bank of England. In fact, the British Pound has lost its competitive advantage of a longer restrictive policy stance after a sharp decline in inflation.
The Euro held its ground yesterday, supported by more hawkish comments from ECB policymakers. In fact, ECB policymaker Klaas Knot stated that the potential for an economic recovery in the eurozone next year and uncertainty over the strength of wage growth meant that there would be no reason for the central bank to rush into rate cuts.
The U.S. Dollar recovered from near five-month lows amid some uncertainty over when the Federal Reserve will begin trimming interest rates. In fact, while Fed Fund futures showed investors still pricing in an over 60% chance of a 25-basis point rate cut in March, some uncertainty over the potential cuts stalled any further losses on the greenback.
Data supplied by GC Partners