The Pound has continued its slide against the Dollar even after The Federal Reserve cut their rates as expected by 25 basis-points. Concerns are growing further ahead of next month’s Autumn Budget with investors digesting reports that suggest The Office for Budget Responsibility is set to downgrade the UK’s productivity, again opening up a possible £20 billion shortfall.
This would force the chancellor into implementing tax hikes and spending restraints which again would only fuel fears that tighter fiscal rules could undermine any UK recovery.
Jerome Powell noted after reducing interest rates that while inflation progress allows some room to ease, further rate reductions are far from guaranteed. These comments showing a resistance to commit to further cuts has offered further support to The Dollar.
We also had The Bank of Canada, who also cut their interest rates by 25 basis-points to 2.25% as expected. The central bank lowered its growth forecast, combined with a slower expansion ahead which is largely down to the impact of tariffs and weaker demand from U.S trade policies.
Moving our focus to today, we have the European Central Bank who are also expected to keep their interest rates unchanged. We do have preliminary GDP data out for Europe at the turn of the hour, which although preliminary will potentially show signs of slowing growth in Europe which could influence future interest rate decisions moving forward.
GBP/EUR 1.1338 GBP/USD 1.3185 GBP/AED 4.8450
GBP/AUD 2.0049 GBP/CHF 1.0522 GBP/CAD 1.8389
GBP/NZD 2.2848 EUR/USD 1.1616 GBP/ZAR 22.7037