Both the pound and the euro made decent gains against the US dollar yesterday, as odds for a US rate cut increased ahead of the Federal Reserve’s policy meeting tomorrow.
Pound investors expect the Bank of England to keep interest rates unchanged at 5.0% on Thursday, however, sterling will be guided by tomorrow’s inflation reading for August as a soft reading tomorrow could trigger selling pressure. Economists estimate the annual core UK CPI to have grown at a faster pace of 3.5% from 3.3% in July.
Should you have any upcoming transactions, speak to your account manager today about managing your currency risk effectively ahead of key decisions later this week.
Wages in the eurozone rose 4.5% year-on-year in the second quarter of 2024, following a downwardly revised surge in the first quarter. This reading was the biggest increase since late 2022, despite slowing wage growth for a number of industries including manufacturing and construction.
Yesterday, The Guardian reported that the rent gap between the north and south of England closed to its lowest level in 11 years. The latest figures say the gap is now 37%, a significant reduction from the 43% gap recorded last year and the 55% peak in 2021.
This morning, September’s German ZEW economic sentiment index figures are due. Markets forecast the rate to fall slightly to 18 from 19.2 in August, which was well below expectations of 32. The indicator’s scale is measured from -100 to 100, with zero representing neutrality.
Later this afternoon, we’ll receive the latest US retail sales data, which is expected to have grown by 0.3% in August, from 1% in July.
Bright and early tomorrow morning, the UK inflation rate is expected to fall slightly from 2.2% in July to 2.1% in August, edging closer to the Bank of England’s 2.0% target.
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 7898 0541 to get started.
