Sterling Rises as Traders Anticipate Busy Week of Data Releases and Central Bank Meetings
Sterling saw a rise against the dollar on Monday as traders prepared for a week filled with data releases and central bank meetings, including the Bank of England (BoE). At 11:38 GMT, the pound was up 0.24% against the dollar, reaching $1.2578.
The BoE is scheduled to hold its final policy meeting of the year on Thursday. It is widely expected that there will be no change to the current Bank Rate, which has been at a 15-year high of 5.25%. In recent weeks, market focus has shifted towards when the BoE will cut the Bank Rate. Traders predict that the British central bank will implement rate cuts at a slower pace compared to the U.S. Federal Reserve.
Stuart Cole, chief macro economist at Equiti Capital, attributed the rise in the pound on Monday to the underlying expectation that the interest rate differential between the UK and the U.S. is likely to widen throughout the next year. Cole also mentioned concerns in the market that the BoE might use this week’s Monetary Policy Committee meeting to push back against the easing measures observed in the markets.
This week will also witness the release of crucial data concerning the UK’s economy. On Tuesday, UK labor market data will be released, followed by GDP data on Wednesday. These figures will provide important insights into the current state of the UK’s economy.
Simon Harvey, head of FX analysis at Monex, stated that his team anticipates this week’s data to confirm the BoE’s stance of maintaining higher interest rates for a longer period. Harvey suggests that the growth data is unlikely to show a mild contraction compared to the eurozone, while labor market data is expected to reveal high wage pressures.
Harvey added that for GBPUSD, this week’s data is unlikely to be a game-changer, as the focus will be on dollar dynamics, with the release of US Consumer Price Index (CPI) on Tuesday and fresh economic projections from the Federal Reserve on Wednesday.
In other news, Make UK, a manufacturing trade body, announced on Monday that Britain’s struggling factories are showing signs of recovery. The sector has been aided by long-awaited restocking and a pickup in export orders, which could offer support in the face of challenges in 2024.
Overall, traders are anticipating a busy week of data releases and central bank meetings, with the BoE’s final policy meeting of the year on Thursday. The data releases, including labor market and GDP data, will provide important insights into the state of the UK’s economy. Meanwhile, the manufacturing sector is witnessing signs of recovery, offering hope for the future.
More detail via Yahoo! Finance here… ( Image via Yahoo! Finance )