Pound Sterling remains in bears’ grip amid potential UK recession risks
+Pound Sterling faces an intense sell-off as the UK economy is exposed to a possible recession.
+The BoE seems done with hiking interest rates as UK Services PMI contracts.
+The market mood remains downbeat as central bankers are expected to keep interest rates higher for a longer period
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UK:
-The BoE kept interest rates unchanged.
-The central bank is leaning more towards keeping interest rates “higher for longer” but it kept a door open for further tightening if inflationary pressures were to be more persistent.
-Key economic data like the latest employment report showed a very high wage growth despite -the rising unemployment rate, but the latest UK CPI missed expectations across the board.
-The latest UK PMIs showed further contraction, especially in the Services sector.
-The market doesn’t expect the BoE to hike anymore.
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US:
-The Fed left interest rates unchanged as expected.
-The macroeconomic projections were revised higher as the economy showed much stronger resilience than expected and the Dot Plot showed that the majority of members still expects another rate hike by the end of the year with less rate cuts in 2024.
-Fed Chair Powell reaffirmed their data dependency but added that they will proceed carefully as they are trying to find the optimal level of rates. Powell also added that the soft landing is not the base case at the moment, although they are aiming for it.
-The latest US CPI came in line with expectations, so the market’s pricing remained roughly the same.
-The labour market displayed signs of softening although it remains fairly solid as seen also last week with the strong beat in Jobless Claims.
-The market doesn’t expect the Fed to hike again at the moment.
+Pound Sterling faces an intense sell-off as the UK economy is exposed to a possible recession.
+The BoE seems done with hiking interest rates as UK Services PMI contracts.
+The market mood remains downbeat as central bankers are expected to keep interest rates higher for a longer period
================================================================================
UK:
-The BoE kept interest rates unchanged.
-The central bank is leaning more towards keeping interest rates “higher for longer” but it kept a door open for further tightening if inflationary pressures were to be more persistent.
-Key economic data like the latest employment report showed a very high wage growth despite -the rising unemployment rate, but the latest UK CPI missed expectations across the board.
-The latest UK PMIs showed further contraction, especially in the Services sector.
-The market doesn’t expect the BoE to hike anymore.
========================================================================
US:
-The Fed left interest rates unchanged as expected.
-The macroeconomic projections were revised higher as the economy showed much stronger resilience than expected and the Dot Plot showed that the majority of members still expects another rate hike by the end of the year with less rate cuts in 2024.
-Fed Chair Powell reaffirmed their data dependency but added that they will proceed carefully as they are trying to find the optimal level of rates. Powell also added that the soft landing is not the base case at the moment, although they are aiming for it.
-The latest US CPI came in line with expectations, so the market’s pricing remained roughly the same.
-The labour market displayed signs of softening although it remains fairly solid as seen also last week with the strong beat in Jobless Claims.
-The market doesn’t expect the Fed to hike again at the moment.
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