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The Bank of England decides interest rates on Thursday. Editorial credit: William Barton, via Shutterstock
Sterling gained against the US dollar but remained unmoved against the euro yesterday as a hectic week for potentially market-moving data and decisions continued.
Yesterday the inflation figures for the UK showed a significant drop from 4% to 3.4% – the lowest since September 2021. Moreover, it was slightly lower than predicted too. The main drop was in food inflation and eating out.
Central bankers are taking centre stage this week, and in the USA members of the Federal Reserve’s rate-setting committee held interest rates at 5.5% but confirmed that rates should come down by three-quarters of a percent this year. This is despite saying that inflation may be higher than expected.
The stock markets rallied in response, with the S&P 500 Index up nearly 1%, the Nasdaq up 1.25% and the pound ended the day 0.5% up on USD.
European Central Bank chief Christine Lagarde was also in the news, confirming that the first cut in rates is likely to be in June but she could offer no promises beyond that: “Our decisions will have to remain data dependent and meeting-by-meeting, responding to new information as it comes in… Even after the first rate cut, we cannot pre-commit to a particular rate path,” she told a conference in Frankfurt.
Today it is Bank of England rate-setters making a decision, at 12 noon, although no move is expected from them yet either. Nevertheless, as pressure grows to lower interest rates, how the voting of the nine-member panel goes will be closely watched by the markets.
In the business news, another big brand fell victim to a cyber-attack, with Greggs joining McDonalds, Sainsbury’s and Tesco in having to close stores temporarily.
Trouble in the rag trade too, with Gucci sales down 20% and Ted Baker looking set to go into administration, with hundreds of jobs at risk.
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GBP: Will sterling stability survive the day?
The big event of the day is of course the interest rate decision at midday today. Before that, however, there will be a ‘flash’ reading for PMI. Then tomorrow we have GfK Consumer Confidence to wake up to and Retail Sales at 7am.
GBP/USD past year
EUR: Euro on upswing
The single currency made gains against most major rivals – of more than 0.5% against the yen and US dollar. Coming up today are PMI readings across the bloc. Will German manufacturing make any progress?
EUR/USD past year
USD: Fed promises rate cuts despite inflation
The dollar lost almost across the board yesterday following the Federal Reserve’s continued interest rate pause. We’ll hear more from central bankers today and tomorrow, plus a reading for PMI.
USD/GBP past year
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