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The pound has gained 1.5% against the US dollar since Tuesday morning
The pound and euro rebounded against the US dollar on Tuesday, gaining 0.65% and 0.7%, respectively as the market mood improved.
Sterling’s advances came following hawkish commentary from Bank of England policymaker, Katherine Mann, who called for a more aggressive approach to bring down UK inflation to the Bank’s 2% target.
US inflation expectations for the year ahead rose to 3.7% in September 2023 from 3.6% in August. This is the highest rate the US has seen in three months.
Crude oil stocks fell towards $85 per barrel on Tuesday after a 4.3% jump on Monday as markets continued to assess supply risks following developments in the Middle East.
The US dollar lost momentum yesterday following dovish comments from the Federal Reserve. President Lorie Logan and governor, Philip Jefferson spoke out on interest rates and suggested the Bank has reached the end of its rate hikes.
The National Federation of Independent Business’ (NFIB) released its US business optimism index figures for September which fell to a four-month low of 90.8 from 91.3 in October. Speaking out on the decline, 23% of business owners reported that inflation was their single biggest problem in September, quickly followed by labour quality.
Yesterday, the International Monetary Fund (IMF) revealed that Australia is under more mortgage stress than any other nation as 15% of its income is devoted to paying off loans. Borrowers in Australia are struggling following eight consecutive months of rate hikes, which began in May last year to December 2022, when the IMF compiled its figures.
This morning, the German inflation rate remained unchanged at 0.3% in September, while the year-on-year rate fell to 4.5% in September from 6.1% in August.
This afternoon, investors across the water will digest the latest producer price inflation (PPI) figures, it’s expected to fall from 0.7% in August to 0.4% in September.
At 7 pm (UK time), the Federal Reserve will release the FOMC minutes from its monthly meeting which are expected to shadow the dovish comments made by Logan and Jefferson on Tuesday.
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GBP: Thursday’s GDP to boost pound
Pound investors are betting on August’s GDP figures from the Office for National Statistics to boost the currency. Markets forecast a 0.1% growth following a 0.5% decline in July.
GBP/USD: the past year
EUR: European shares lose momentum
European shares are slightly down this morning, following a rally on Tuesday fuelled by US policymakers’ dovish stance. Frankfurt’s DAX 40 dropped 0.3% and the pan-European STOXX 600 lost around 0.2%.
USD: Mexican peso advances
The Mexican peso gained 1.85% against the US dollar yesterday following dovish comments from the Federal Reserve. This movement was influenced by the plunge in US Treasury bond yields.
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