Magna Financial Market Report – Friday 8th November 2024
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- Trump policies stir inflation concerns across markets
- ECB signals caution on tariffs and rates
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RECAP
The Bank of England reduced interest rates by 25bps yesterday, in line with market expectations, with one dissenting vote preferring no change. The BoE expressed concerns that recent budget policies could push inflation up by 0.50%, hinting they’ll likely avoid aggressive rate cuts. Governor Bailey also suggested gradual cuts could continue if the economic outlook aligns with their forecast. This led gilt yields to rise, with December’s rate-cut odds dropping to 23%, while GBP spiked, with GBPEUR attempting
to reach yearly highs.
Meanwhile, USD softened slightly as markets awaited the Fed’s evening decision. As anticipated, the Fed matched the BoE with a 25bps rate cut and signaled a slower approach to future cuts. Although Chair Powell refrained from commenting on the
implications of Trump’s win, the chance of another cut in December now sits around 50%.
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OUR SUMMARY
Looking ahead, markets are watching closely for longer-term impacts under Trump, particularly if he enacts tax cuts and tariffs as promised. These policies could fuel inflation in the US while potentially weighing down European growth and exchange rates, according to ECB’s Stournaras and prevailing market
sentiment.
In early trading, sentiment dipped as China’s CNY6 trillion support package for local governments fell short of expectations, leading to weakness in EUR and AUD. As these dynamics unfold, markets brace for the potential volatility ahead.
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HOW WE CAN HELP
Our team of currency experts are here to help you get more from your money when making international payments. We will work with you to understand your payment needs and offer specialised guidance on the best options available to you. Get in touch with Osman Hanif today on +44 (0) 20 3371 9200 or
email osman@magnafinancial.com
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