Policymakers at the Bank of England will meet today for their last rate setting appointment of 2024. Markets are expecting little appetite for a second consecutive cut, particularly given Wednesday’s eye-catching inflation increase and uncertainty surrounding the impact of the Autumn budget. It is no secret that markets have been wrong in the past, though.
It was a different story in the US last night, where the Federal Reserve announced it was cutting interest rates from 4.75% to 4.5%. That decision was more or less a given but perhaps more significant was the Fed’s updated chart of projected future rate cuts. The official forecast now includes fewer interest rate cuts in 2025 than before, which caused the US dollar to advance by more than a cent against both the pound and the euro.
Major currencies had a fairly settled day on Wednesday ahead of the Fed’s decision. GBP/EUR trended marginally upwards, while sterling retraced some of yesterday’s gains over the US dollar. The euro meanwhile lost just under a third of a cent to the US dollar.
The backdrop to the Fed’s decision was soaring building permits in November. Having fallen last month, annualised permits climbed to over 1.5mn – a rise of 6.1% month-on-month and well above consensus forecasts.
A London School of Economics survey estimated that Brexit had a £27bn hit on British exports between 2021 and 2022. In a survey of more than 100,000 firms, the study found that exports had fallen by over 6% and imports by 3% with the biggest impact felt by small companies. These punchy numbers are actually below those previously projected by the Office for Budgetary Responsibility (OBR).
UK renters felt more pain in November as average rental prices increased by over 9% for private properties. In another significant milestone, demand for rental properties fell for the first time since the pandemic, the Office for National Statistics (ONS) reported.
The average house price in the UK meanwhile rose by 3.4% to £292,000 in October, an even faster pace of growth than in September.
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