Markets.com Logo
euEnglish
LoginSign Up

Sterling slides vs. USD ahead of Fed, BoE meetings

Jan 31, 2024
4 min read
Table of Contents
  • 1. Pound sterling slides against dollar ahead of Fed, BoE meetings 
  • 2. Danske Bank negative on sterling, says BoE will follow ECB’s cutting cycle 
  • 3. Odds of March interest rate cut by Federal Reserve down to 45% 

Few Hundred Pound

 

Pound sterling slides against dollar ahead of Fed, BoE meetings 

The British pound was declining against a strengthening dollar on Wednesday, with investors anticipating policy decisions from both the Bank of England and the Federal Reserve in the coming days. 

At the time of writing on Jan. 31, the pound had decreased by 0.2% to $1.2671 against the dollar, with the GBP/USD pair poised to end the month with a 0.3% loss. 

Kirstine Kundby-Nielsen, FX analyst at Danske Bank, told Reuters: 

"Markets are just positioning themselves before the Fed tonight and Bank of England policy meeting tomorrow”. 

Despite recent losses, sterling remains one of the top performers among the G10 currencies against the dollar this year, supported by the UK's robust economic performance and sticky inflation figures, with price increases appearing more persistent than in other regions. 

Early indicators this month, such as the preliminary S&P Global/CIPS UK Composite PMI, suggested that the UK economy entered 2024 on a stronger footing, reaching a seven-month high. 

It is widely anticipated that the Bank of England will keep current interest rates unchanged at its policy announcement on Thursday, with the market fully expecting the first rate cut by the June meeting. 

Investors have scaled back their expectations for rate cuts from the Bank of England this year, with current market projections suggesting approximately 100 basis points of reductions in 2024, equivalent to about four quarter-point cuts. This is down from the previously expected five 25-basis-point cuts before UK inflation data for December was released in mid-January. 

In comparison, the market is forecasting around 130 basis points of reductions from the Federal Reserve and nearly 140 basis points of easing from the European Central Bank in 2024. 

Danske Bank negative on sterling, says BoE will follow ECB’s cutting cycle 

The EUR to GBP rate was up 0.07% at 85.47 pence, indicating marginal strength in the euro. Pound sterling, however, is still on course for an almost 1.5% increase in January, marking its largest monthly gain against the single currency since May 2023. 

Danske Bank's Kundby-Nielsen commented to Reuters: 

"We don't expect inflation to deviate by the extent priced by markets and expect the Bank of England to follow the cutting cycle of the ECB, where we see the same inflation dynamics. That's one reason why we're negative on sterling from here”. 

Analysts have noted that the absence of clear signals from UK policymakers ahead of Thursday's announcement could lead to increased volatility in the currency. 

Reuters quoted Kamal Sharma, senior G10 FX strategist at Bank of America, as saying: 

"We're operating in a bit of a void of information from the Bank of England, which is unusual coming into the first meeting of the year”. 

Odds of March interest rate cut by Federal Reserve down to 45% 

Markets.com Chief Market Analyst Neil Wilson weighed in on the Federal Reserve’s upcoming interest rate decision in his morning note on Wednesday: 

“Fed meeting today is the big event – futures expect 150bps of cuts this year: will the FOMC disabuse markets of this? That amount of cutting is only really done in recessions and if it’s not then it can lead to too much exuberance in markets as in ‘87. And if the Fed does cut when unemployment remains so low and the economy barrelling along the way it is, what chance a second inflation wave? Do we get Volcker or Burns? Of course, market pricing encapsulates a lot of variables — it’s not necessarily what any single person thinks will happen.   

Odds of a March cut are down to 45%, quite a bit down from the start of the year – the economy is doing well, labour market is tight and maybe the market overread the December ‘pivot’. But I would question whether the Fed wants to get the sequencing in early here – cut earlier but slower? Fed governor Waller pointed to this. And it’s an election year. Lots to consider – we could see some language change from the Fed today – dropping from the statement the bias for additional policy firming that would be a sign of easing bias. But in short a) no cut and b) no tie to March.” 

At the time of writing on Jan. 31, the U.S. dollar index (DXY) — a gauge of USD’s performance against six major peers — traded slightly lower ahead of the decision at 103.30 (down 0.09%). 

When considering foreign currency (forex) for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss. 

Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice. 


Risk Warning and Disclaimer: This article represents only the author’s views and is for reference only. It does not constitute investment advice or financial guidance, nor does it represent the stance of the Markets.com platform. Trading Contracts for Difference (CFDs) involves high leverage and significant risks. Before making any trading decisions, we recommend consulting a professional financial advisor to assess your financial situation and risk tolerance. Any trading decisions based on this article are at your own risk.

Georgy Istigechev
Written by
Georgy Istigechev
SHARE

Markets

  • Palladium - Cash

    chartpng

    --

    1.13%
  • EUR/USD

    chartpng

    --

    -0.07%
  • Cotton

    chartpng

    --

    0.19%
  • AUD/USD

    chartpng

    --

    0.35%
  • Santander

    chartpng

    --

    -1.74%
  • Apple.svg

    Apple

    chartpng

    --

    0.56%
  • easyJet

    chartpng

    --

    -0.83%
  • VIXX

    chartpng

    --

    -0.88%
  • Silver

    chartpng

    --

    0.53%
Tags DirectoryView all
Table of Contents
  • 1. Pound sterling slides against dollar ahead of Fed, BoE meetings 
  • 2. Danske Bank negative on sterling, says BoE will follow ECB’s cutting cycle 
  • 3. Odds of March interest rate cut by Federal Reserve down to 45% 

Related Articles

Stock market today: Nasdaq rallied to new highs as Nvidia hits $4T valuation

Stock market today: the Nasdaq Composite Index surged to new highs today, fueled primarily by Nvidia’s unprecedented achievement of reaching a $4 trillion market valuation.

Ghko B|about 18 hours ago

Datadog (DDOG) Joins S&P 500: What’s the Datadog stock price target in 2025?

Datadog (DDOG) Joins S&P 500: Datadog, a leading provider of monitoring and analytics for cloud-scale applications, recently achieved a significant milestone by joining the S&P 500.

Ghko B|about 18 hours ago

Morning Note: Stocks Hold as Fed Cautious; Bitcoin Soars; RBA CBDC Trials

U.S. stocks held their ground after the release of the Federal Reserve’s minutes from its June 17–18 meeting, which revealed that only a few officials anticipated rate cuts as early as this month.

Tommy Yap|about 18 hours ago
Markets.com Logo
google playapp storeweb tradertradingView

Contact Us

support@markets.com+12845680155

Markets

  • Forex
  • Shares
  • Commodities
  • Indices
  • Crypto
  • ETFs
  • Bonds

Trading

  • Trading Tools
  • Platform
  • Web Platform
  • App
  • TradingView
  • MT4
  • MT5
  • CFD Trading
  • CFD Asset List
  • Trading Info
  • Trading Conditions
  • Trading Hours
  • Trading Calculators
  • Economic Calendar

Learn

  • News
  • Trading Basics
  • Glossary
  • Webinars
  • Traders' Clinic
  • Education Centre

About

  • Why markets.com
  • Global Offering
  • Our Group
  • Careers
  • FAQs
  • Legal Pack
  • Safety Online
  • Complaints
  • Contact Support
  • Help Centre
  • Sitemap
  • Cookie Disclosure
  • Regulation
  • Awards and Media

Promo

  • Gold Festival
  • Crypto Trading
  • marketsClub
  • Welcome Bonus
  • Loyal Bonus
  • Referral Bonus

Partnership

  • Affiliation
  • IB

Follow us on

  • Facebook
  • Instagram
  • Twitter
  • Youtube
  • Linkedin
  • Threads
  • Tiktok

Listed on

  • 2023 Best Trading Platform Middle East - International Business Magazine
  • 2023 Best Trading Conditions Broker - Forexing.com
  • 2023 Most Trusted Forex Broker - Forexing.com
  • 2023 Most Transparent Broker - AllForexBonus.com
  • 2024 Best Broker for Beginners, United Kingdom - Global Brands Magazine
  • 2024 Best MT4 & MT5 Trading Platform Europe - Brands Review Magazine
  • 2024 Top Research and Education Resources Asia - Global Business and Finance Magazine
  • 2024 Leading CFD Broker Africa - Brands Review Magazine
  • 2024 Best Broker For Beginners LATAM - Global Business and Finance Magazine
  • 2024 Best Mobile Trading App MENA - Brands Review Magazine
  • 2024 Best Outstanding Value Brokerage MENA - Global Business and Finance Magazine
  • 2024 Best Broker for Customer Service MENA - Global Business and Finance Magazine
LegalLegal PackCookie DisclosureSafety Online

Payment
Methods

mastercardvisanetellerskrillwire transferzotapay
The markets.com/za/ site is operated by Markets South Africa (Pty) Ltd which is a regulated by the FSCA under license no. 46860 and licensed to operate as an Over The Counter Derivatives Provider (ODP) in terms of the Financial Markets Act no.19 of 2012. Markets South Africa (Pty) Ltd is located at BOUNDARY PLACE 18 RIVONIA ROAD, ILLOVO SANDTON, JOHANNESBURG, GAUTENG, 2196, South Africa. 

High Risk Investment Warning: Trading Foreign Exchange (Forex) and Contracts For Difference (CFDs) is highly speculative, carries a high level of risk and is not appropriate for every investor. You may sustain a loss of some or all of your invested capital, therefore, you should not speculate with capital that you cannot afford to lose. You should be aware of all the risks associated with trading on margin. Please read the full  Risk Disclosure Statement which gives you a more detailed explanation of the risks involved.

For privacy and data protection related complaints please contact us at privacy@markets.com. Please read our PRIVACY POLICY STATEMENT for more information on handling of personal data.

Markets.com operates through the following subsidiaries:

Safecap Investments Limited, which is regulated by the Cyprus Securities and Exchange Commission (“CySEC”) under license no. 092/08. Safecap is incorporated in the Republic of Cyprus under company number ΗΕ186196.

Finalto International Limited is registered  in the Saint Vincent and The Grenadines (“SVG”) under the revised Laws of Saint Vincent and The Grenadines 2009, with registration number  27030 BC 2023.

Close
Close

set cookie

set cookie

We use cookies to do things like offer live chat support and show you content we think you’ll be interested in. If you’re happy with the use of cookies by markets.com, click accept.