Accueil Daily Commentaries European Central Bank cuts interest rates by 25 basis points

European Central Bank cuts interest rates by 25 basis points

Conor Fleming
Written by
Conor Fleming

Conor Fleming

OFXpert

With 30 years of experience in the foreign exchange world, Conor spearheads initiatives to encourage businesses in Germany, Switzerland, and Austria to hedge their foreign currency risks with OFX.

| Friday 7 June, 2024

Mise à jour quotidienne sur les devises

After today’s 25 basis point interest rate cut by the European Central Bank (ECB), the council made it clear that any additional cuts will be strictly data-dependent. Wage growth and services inflation remain stubbornly high and require vigilant monitoring over the coming months.

The Pound has been steadily appreciating against the Dollar and Euro over the past few weeks. Recent robust economic data in the UK has reduced expectations of interest rate cuts by the Bank of England. Similar to Europe, the Monetary Policy Committee (MPC) has reiterated that all potential rate cuts will be data-dependent.

In the US, Treasury yields remain soft, which has been putting pressure on the US Dollar. This dip in Treasury yields is likely to continue unless the Federal Reserve indicates that rates may not move lower in the US as much as markets expect.

Principaux mouvements

In the US, Treasury yields remain soft, which has been putting pressure on the US Dollar. This dip in Treasury yields is likely to continue unless the Federal Reserve indicates that rates may not move lower in the US as much as markets expect.

Upward revisions for inflation and growth expectations pushed the Euro higher this week. Markets had already priced in the ECB's 25 basis point cut, resulting in a muted effect on the Euro's value. The GDP forecast for Europe in 2024 has been revised upward from 0.6% to 0.9%.

The upcoming UK elections on July 4th may lead to a dip in the Pound, but currently, markets have reduced their expectations of interest rate cuts by the Bank of England. This has supported the Pound as markets await the release of the Halifax house price index tomorrow.

In the US, the release of non-farm payroll data tomorrow will provide insight into the job market's performance. Wholesale inventories will also be closely watched for signs of a reduction in economic activity. The US Dollar is likely to remain volatile as markets closely monitor these upcoming data releases.

Fourchettes attendues

  • GBP/USD: 1.2765 - 1.2820 ▲
  • GBP/EUR: 1.1720 - 1.1770 ▲
  • GBP/AUD: 1.9145 - 1.9210 ▲
  • EUR/USD: 1.0855 - 1.0915 ▲

Written by

Conor Fleming

OFXpert

With 30 years of experience in the foreign exchange world, Conor first embarked on his financial career journey as a trainee dealer in BNP Paribas in the early 90s. His professional journey also took him to New York, where he assumed the role of Head of Sales with an Irish bank for a few years. During his tenure at both banks, he was invited to several interviews on Irish television to discuss market turbulence, the factors driving volatility and insights into what could be expected as events unfolded.

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