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The pound holds steady against major rivals the US dollar and euro
The pound held its ground against major currencies yesterday ahead of key economic data expected to come later this week.
Tomorrow morning, UK inflation is forecast to fall to 3.5%, after two months of no movement. Should the rate reduce, it signals that the Bank of England’s monetary tightening policy is working. This information will be pivotal ahead of the Bank of England’s interest rate decision on Thursday.
The Bank of Japan met market expectations early this morning by raising interest rates to around 0% to 0.1%, from -0.1%. This move ends its eight years of negative rate policy and marks the first rate hike for Japan since 2007.
The Reserve Bank of Australia, however, kept rates unchanged during its second meeting of 2024 as widely expected. The rate is currently at 4.35%, where it has remained since November last year.
The NAHB/Wells Fargo housing market index rose in the US in March to 51, from 48 in February. This represents a rise in homebuilder confidence as buyers continue to turn to new-build homes due to a lack of existing inventory.
Property portal, Rightmove UK reported yesterday that UK house prices have grown 1.5% this month, pushing the average home asking price to almost £370,000. This 1.5% increase is the biggest monthly increase markets have seen for 10 months.
This comes after Halifax last week reported that average UK house prices were just £1,800 off the peak recorded in June 2022.
Later this morning, the ZEW economic sentiment index will shed light on Germany’s outlook, which is expected to rise for the eighth consecutive month to 21, from 19.9 in February.
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 account manager on 020 3918 7255 to get started.
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A letter to BoE governor, Andrew Bailey, from over 50 leading economists and campaign groups warned the Bank is falling behind other major central banks as its work on green measures falls short.
GBP/USD: the past year
EUR: Eurozone inflation at 3-month low
The consumer price inflation rate in the euro area was confirmed at 2.6% year-on-year in February 2024, the lowest rate in three months but exceeding the European Central Bank’s 2.0% target.
EUR/GBP: the past year
USD: Dollar index soars
The dollar index is hovering around its highest levels in two weeks ahead of the Fed’s interest rate decision on Thursday. While investors widely expect the central bank to hold rates steady this week, they will be focused on any hints about the scale and timing of an expected easing cycle.
USD/EUR: the past year
