By Ashley Finill
This week Sterling has bounced back from the losses seen at the end of last week, as on Friday the UK economy experienced a setback as GDP fell by 0.1% in October for the second month in a row. But a fresh start to the week and fresh data has given sterling a boost, as yesterday wage growth in the UK came in better than expected and as a result the Pound gained just over half a cent on both the Euro and US dollar. Inflation in the UK has been released this morning coming in at 2.6%, this is up from last month’s figure of 2.3%. The figure was predicted to rise by economists due to the energy cap being raised in October and again in January next year. It is also noted that the October budget set out by the Labour government may not have come into effect on the inflation rate on this month’s reading and we could see another rise in the next reading in January. Since inflation has been released it has put Sterling on the backfoot for this morning’s trading with a slight drop off against both the US dollar and Euro.
Interest Rate Decisions from BoE and FED
Tomorrow the Bank of England will announce the interest rate decision, it is expected to be held again as inflation continues to rise in the UK. It had been expected earlier in the year that the BoE were to be more bullish on cutting rate throughout the back end of 2024 into 2025 but with rising inflation there has been a change of course with the monetary policy committee going for a more cautious approach. As mentioned, inflation rose to 2.6% for November up from the previous month by 0.3% which edges further away from the BoE’s 2% target, reports also suggest that the figure is likely to increase again to over 3% in next month’s reading, should that happen then we can expect the Bank of England to be more cautious in cutting rates in 2025. The meeting takes places tomorrow with the interest rate decision at 12pm, a press conference will be held after the decision with Bank of England Governor Andrew Bailey taking questions from the press, he will give a broader outlook on their plans going into 2025. The Federal Reserve in the US also announce their decision on cutting interest rates today. The Fed are expected to cut rates in the country from 4.75% to 4.5%, this announcement will be made this evening at 7pm.
Remaining data
As we edge closer to the festive break, data releases will start to fade out for the month of December but there are still some important releases to take note of this week. This morning at 10am in the EU Consumer price data will be released. Over to the states in the afternoon, Building permits and housing starts will be posted at 1.30pm. In the Evening the Fed announced their interest rate at 7pm, in the evening at 9.45pm New Zealand release GDP. Tomorrow, at 12pm the BoE announce the interest rate decision in the UK. Into Thursday afternoon, the US release GDP at 1.30pm and finally into Friday and some important releases to see out the week. In the morning at 7am retail sales figures will be announced in the UK, this is likely to wake up the market early doors. Into the afternoon the US release PCE data this follows their GDP report and could cause volatility in the afternoon’s trading. Finishing the week, the US posts Michigan Consumer Sentiment Index at 3pm. As always, stay in close contact with A Place in the Sun Currency ahead of the festive break for friendly and professional guidance.