Market Report : 22.03.2024

Published: 22/03/2024 By ECAP

The British Pound fell yesterday after the Bank of England kept interest rates unchanged but signalled the economy was moving in the right direction for it to start cutting rates. The BoE's interest rate-setters voted 8-1 to keep borrowing costs at their 16-year high of 5.25% as the two officials who had previously called for higher rates changed their stance.

The Euro will likely continue to struggle against the U.S. Dollar as weaker economic growth and a faster pace of deflation in the European Union could force the ECB to cut rates more aggressively than the Federal Reserve. In fact, bets on an ECB rate cut as soon as June were boosted on Wednesday, following the surprise move by the Swiss National Bank to lower its benchmark rate.

The U.S. Dollar surged to a three-week high in Asian trade, extending yesterday’s strong rebound. The rally comes after the Fed sharply upgraded its outlook for growth in 2024, favouring flows into the greenback. While the central bank is still expected to begin cutting interest rates by June, its relative hawkishness, in comparison to other central banks, has benefitted the dollar.

Data supplied by GC Partners