 The currency markets are currently in a state of anticipation, with Dollar trading within familiar range as investors await FOMC rate decision. The critical question facing the markets is whether Fed will signal the pace of rate cuts in its updated dot plot. In September, the median projection indicated the federal funds rate would remain at 5.125% by the end of 2024, implying no rate cuts from the current level. While revisions to this projection are expected, the exact pace and extent of potential rate cuts remain uncertain. Meanwhile, Sterling has weakened broadly following release of GDP data that showed deeper-than-anticipated contraction. This has raised concerns that the UK economy may already be in a recession. Additionally, the slowing wage growth combined with a less optimistic economic outlook could lead to a shift in stance among the more hawkish members of BoE's MPC. While BoE Governor Andrew Bailey is expected to push back against speculations on rate cut following tomorrow's decision, there are discussions suggesting BoE might cut rates sooner than previously anticipated due to subdued growth... |
