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Market Update

• Posted by currencies in Sterling, UK, Uncategorised
• August 23, 2024
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JPY has been the best performing Asian currency this week and with hawkish signals from BoJ (bank of Japan) Governor Kazuo Ueda for upcoming interest rate decisions. This was consolidated this morning, during his press conference he stated that on a short-term basis interest rates are set too low. However, this was quickly offset when inflation levels were released for July seeing a decrease from 2.2% down to 1.9%, excluding food and energy.

Today indicates the first day of Jackson Hole. Jackson Hole is viewed as the premier central banking conference of the year. It will commence at 3pm UK time with a speech from Federal Reserve President Jerome Powell. Leading up the conference, it’s not been any indications of surprises from the Federal Reserve with discussions regarding future monetary actions. Markets are set for a rate cut in September, hence why we are seeing USD weakness. However, with a rate cut taken place in September there is now discussions of its magnitude. Latest market percentage of a possible 50 basis points has rose to 25%. If there would be any indications from Jackson Hole that this can happen, we can see further USD weakness.

At 4pm we will hear from Bank of England’s Governor Andrew Bailey, GBP is currently performing very well against the USD – touching a 12-month high yesterday when reaching 1.3130. Recent economic data suggest that the UK is handling/performing better than other G10 nations when it comes to economic growth. Remember that UK is a servicing country, meaning it relies heavily on importation. A strong sterling can accumulate further imports and nurture the economy further.