Federal Reserve holds interest rates

The Federal Reserve held interest rates in July 2024

Yesterday, the Federal Reserve chose to keep the federal funds rate at a 23-year high of 5.25-5.5% for the eighth consecutive meeting.

This morning, the US dollar has gained 0.3% against the pound and made marginal gains against the euro.

Despite slipping around a quarter of a per cent against the euro yesterday, sterling ended Wednesday pretty much where it started, and heads into August around 0.4% lower than this time last month.

The eurozone inflation rate edged up unexpectedly in July to 2.6% from 2.5%. Investors had expected a decline to 2.4%, which would’ve inched closer to the European Central Bank’s 2.0% target.

The Bank of Japan ended a stimulus era yesterday by raising interest rates to 0.25% in July from 0.1% in June. The board voted 7-2 in favour of the hike and governor, Kazuo Ueda said the move was the ‘largest [hike] since a 25-basis point increase in February 2007, which was the last major policy tightening before a long era of massive monetary stimulus aimed at reflating sluggish consumer demand.’

The share price of UK lender, Metro Bank added more than 30% yesterday after hinting that it expects to return to profit this year.

At midday today, the Bank of England is anticipated to lower interest rates by 25 basis points to 5.0%, a rate not seen since August 2023.

Later this evening, the latest US manufacturing PMI from ISM is forecast to fall ever-so-slightly to 48.2 in July from 48.5 in June. This indicates another month of declines, as figures under 50 so indicate.

Make sure any upcoming transactions are protected against the risks of sudden market movements. Secure a fixed exchange rate now with a forward contract; call your business account manager on 020 3918 7255 to get started.

 

GBP: UK stocks end July on a high

British stocks, the FTSE 100 rose by 1.1% on Wednesday, soaring to the highest rate in over two months. One of the index’s largest constituents, HSBC jumped by 4%, which greatly contributed to these gains following increased profits at the bank, which were announced alongside a new chief financial officer.

GBP/USD: the past year

 

EUR: Strong July against the USD

The euro gained over three-quarters of a per cent against the euro in July, which is beneficial to Europeans with any upcoming transfers to the US. To benefit from today’s rate, speak to your account manager about using a forward contract.

GBP/EUR: the past year

USD: Japanese yen continues to soar

The Japanese yen added almost 1.5% against the US dollar yesterday, building on Tuesday’s strength and taking the currency pair’s monthly gains to almost 7%. This movement was largely influenced by hawkish commentary from Bank of Japan policymakers before yesterday’s meeting.

USD/EUR: the past year