The pound was on top form yesterday as it added over half a per cent against the euro and made marginal gains against the US dollar, but not enough to cancel out Tuesday’s losses.
The US dollar did, however, gain 0.4% against the euro in Wednesday’s session following a mixed bag of US data.
The first of three influential macro releases was US job openings, which decreased by 62,000 to 8.79 million in November 2023, marking the lowest level since March 2021 and falling below the forecasted 8.85 million.
The ISM Manufacturing purchasing managers’ index in the US improved slightly to 47.4 in December 2023. While this was better than the market consensus of 47.1, it marks the 14th month of contraction in factory activity.
The latest Federal Reserve policy meeting minutes were released last night, which poured a little cold water on the US dollar rally. Policymakers noted that economic activity had slowed, and while inflation remained above target, the Fed’s influential “dot plot” (i.e. the direction interest rates are expected to move by the end of the year) was revised from the 5.1% projected last September to 4.6%.
EUR/USD remained broadly unchanged after the release but GBP/USD climbed by around a quarter of a cent.
Mortgage lenders across the UK, including HSBC, announced across-the-board interest rate cuts with reductions of up to 1%. This comes after expert predictions that the Bank of England could action as many as four interest rate cuts in 2024.
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