- The Bank of England delivered a 25bp interest rate cut yesterday, taking the benchmark rate down from a 16 year high to 5%. This was the first cut from the MPC since the start of the pandemic back in March 2020. Committee members voted 5-4 to lower rates with Governor Andrew Bailey warning people not to expect a sharp fall in the coming months. The narrow vote suggests that this is a hawkish cut with markets suggesting that the central bank is getting ahead of the curve rather than play catch up later in the year amid evidence that inflation is moving towards the target rate. Bonds rallied pushing yields lower with another 17bp of cuts priced into the remainder of 2024. The pound fell below the 50-day MA of 1.2786 to trade as low as 1.2713 before recovering a touch to consolidate around 1.2735 this morning.
- The US dollar has edged a tad higher as markets look forward to the release of this afternoon’s Non-farm Payroll report. Markets are forecasting a print of 175k for July, down a touch from the previous reading with the unemployment rate predicted to come in at 4.1%. With the FOMC electing to keep interest rates on hold earlier this week, markets will be paying close attention to today’s labor market data as well as the upcoming inflation report, seeking further clues on the timing of the first cut from the Fed. With the yield on 2-year treasury futures dropping to their highest level in over a year, and just three more FOMC meetings in 2024, a September cut remains firmly on the table.
We are using cookies to give you the best experience on our website. Download the GPS Cookies Policy for more information. The main types of cookies we use are as follows: strictly necessary cookies, performance cookies, advertisement cookies, and analytics cookies. You can find out more about which cookies we are using or switch them off in settings. Except for strictly essential cookies, you have also the option to decline the usage of cookies at any time. You can do this through this cookie management panel, which appears when you first visit, and you can access it independently through the link provided at the foot of the page.