- The pound has not been making many headlines this week, however GBPUSD is lower today after dovish comments yesterday from BoE Governor Andrew Bailey. The pace and timing of interest rate cuts from global central banks has been driving markets in recent weeks and the BoE has been largely on the sidelines until Bailey said in an interview with the Guardian newspaper that he sees a chance of more aggressive cuts if news on inflation continues to be supportive. The pound has been one of the best performing currencies this year and continued to post gains after the Federal Reserve and ECB cut interest rates, as markets believed that the BoE would not be as quick to cut rates. After trading above 1.34 at the end of last month, cable is currently consolidating in the mid 1.31’s as markets are now almost fully pricing in a 25bp cut at the November meeting. With both the Fed and ECB poised to deliver two more cuts in 2024 the odds of a consecutive 25bp cut from the BoE in December currently sits around 40%.
- US labor market stats continue to dominate the data calendar this week, with tomorrow’s Non-farm Payroll release the highlight. After a solid JOLTs report earlier this week, analysts were looking for further clues from yesterday’s ADP Private Payroll release. Septembers’ print came in a touch over consensus at 143k vs 125k, however the market took the data within its stride as we now await weekly jobless claims, and the ISM Services index this afternoon.
- Elsewhere, the Japanese yen hit a six-week low against the greenback after dovish comments from Japanese Prime Minister Shigeru Ishiba. The currency has endured a roller coaster ride during the past few trading sessions after Ishiba said that the economy isn’t ready for another interest rate hike.
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