Last night’s 0.25% interest rate cut from the Federal Reserve knocked the pound and the euro back slightly ahead of the Bank of England’s decision at noon today. Sterling has still strengthened by almost a cent against the US dollar since the end of August, although it has struggled to build up much momentum against the euro despite a positive day on Wednesday.
President Trump is currently sampling Britain’s trademark autumn weather on his second state visit, but he will no doubt be glad to hear the news from across the Atlantic. Having exerted significant pressure on chair Jerome Powell to speed up the cuts, the president will likely renew his calls for more urgent action to stimulate the economy.
The BoE will of course make its own decision today, although one unlikely to spark as much glee. Economists predict policymakers to announce a hold after August’s risky cut, but as always in these situations, much will be made of exactly how the votes fall. Sterling could suffer should more than the expected two voters call for a cut.
The Bank of Canada snipped interest rates by a quarter point yesterday afternoon, taking them from 2.75% to 2.5%. That decision was in line with consensus market expectations and followed a string of holds stretching back to March.
Away from the central bankers, the UK spent Wednesday digesting the news of another hot inflation report. A pair of housing metrics from the United States meanwhile showed activity was slowing down when it comes to new-build projects.
Social media scrollers could soon be tapping on a new TikTok. American and Chinese officials have reportedly agreed to the framework of a deal that would spin the US arm off to a number of tech firms.
Make sure any upcoming transactions are protected against the risks of sudden market movements. Secure a fixed exchange rate now with a forward contract or call your account manager on 020 7898 0541 to get started.
