26/07/2024
Written by: Ian Morley
Summary:
Market movements remained relatively calm yesterday, with underlying geopolitical tensions persisting as Israel considers potential retaliation against recent strikes from Iran. ECB president Christine Lagarde hinted at the possibility of an imminent rate cut, citing ongoing monitoring of disinflation trends.
Fed Chair Powell’s remarks yesterday evening indicated a willingness to delay rate cuts in response to recent US inflation data.
Market Insight:
GBP saw an uptick this morning following slightly higher-than-anticipated CPI figures. While inflation appears to be on a downward trajectory, March’s data suggests that the deceleration might not be happening quickly enough. Consequently, money markets have postponed their expectations for a BoE rate cut to September, with a probability of 90%, mirroring expectations for the Fed. GBP stands to gain in the short term.
Later today, final CPI figures from Europe are expected, unlikely to significantly impact expectations for ECB interest rate cuts. Positive indications of US growth in the Fed’s beige book would likely be viewed favourably for USD.