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The Bank of England's Huw Pill said yesterday rate cuts could come in 2024.
Following the European Central Bank’s decision to keep its Bank rate unchanged last week, the euro heads into November close to 0.5% up against the pound compared to late September.
On Friday, US personal spending rose more than expected, growing 0.7% in September, beating the market consensus of a 0.4% and boosted by services and goods expenditures. This result limited the dollar’s gains against the euro as the greenback lost 0.3% on Friday afternoon.
The Bank of Russia hiked its key interest rate to 15% in its October meeting, reflecting a 200-basis point rise. This was double market expectations and signalled that monetary policy will remain elevated for a prolonged period.
The Australian dollar was on top form on Friday, gaining 0.47% against the US dollar, supported by growing expectations that the country’s central Bank will raise rates in November following hotter-than-expected inflation data.
Consumer confidence in Italy dropped for the fourth consecutive month in October to 101.6 from 105.4 in September, marking the lowest reading since January. This was considerably lower than market forecasts of 105.2.
This morning, property portal Zoopla reported house prices are falling in most parts of the UK as high interest rates put a growing strain on household wealth.
Today’s data releases will be dominated by Germany’s GDP results and inflation rate, which is expected to decline to 4.0% from 4.5% in September.
Tomorrow, investors will receive various eurozone data, with inflation rates and GDP data for the euro area, France and Italy.
On Wednesday, US data takes centre stage, with ISM manufacturing PMI, JOLTs job openings and the Federal Reserve’s interest rate decision. Markets predict the Bank will keep the rate at 5.5%.
Then, on Thursday, the Bank of England’s interest rate decision is due. More on that below.
Friday will be relatively quiet until the afternoon, when US non-farm payrolls, unemployment rate (October) and ISM services PMI will be released.
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GBP: Unchanged rate expected
On Thursday, Bank of England policymakers are due to announce their latest interest rate decision. The Bank is expected to leave its base rate at 5.25%, matching the ECB’s sentiment. Ahead of this decision, investors remain cautious as data can heavily influence Bank members’ decisions.
GBP/USD: the past year
EUR: Euro fragile after ECB decision
After the European Central Bank chose to keep interest rate unchanged, the euro approached November 0.45% lower against the US dollar and remains largely unchanged against the pound (compared to this time last week).
USD: Boosted consumer sentiment
The Michigan consumer sentiment for the US was revised higher on Friday, coming in at 63.8 in October. Although up from the preliminary reading of 63, the result marked a sharp retreat from September’s reading of 68.1 to the lowest level since May.
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