Market Report : 25.01.2024

Published: 25/01/2024 By ECAP

The British Pound rallied against the dollar and the euro yesterday after a survey showed that UK business activity outpaced that of major European economies, further fuelling the case for British rates to stay higher for longer. On that note, the BoE meets next week to discuss monetary policy. The expectation baked into markets right now is for UK rates to start to decline in June, with little chance of a drop before then.

The Euro faced downward pressure following yesterday’s preliminary Consumer Confidence data, indicating a decrease in consumer trust regarding economic activity. Looking forward, market participants await tomorrow’s central bank meeting. The ECB has generally predicted a stable interest rate environment until the summer months unless there are significant shifts in the underlying economic indicators.

The greenback marked a strong start to 2024 as inflation and labour market data saw investors scale back expectations for early interest rate cuts by the Fed. This notion was exacerbated by a series of hawkish comments from Fed officials over the past week. Focus now turns to fourth-quarter gross domestic product data, due tomorrow, and PCE price index data due on Friday.

Data supplied by GC Partners