Action Insight Mid-Day Report 9-19-24

Sterling Gains on Cautious BoE, Investors Embrace Fed's Message

Sterling surged notably today and reached its highest level against Dollar since March 2022. The move followed BoE's decision to hold interest rates steady as expected. The surprise came from Deputy Governor Dave Ramsden, who chose not to vote for a rate cut. The overall tone from BoE suggests that while further rate cuts are still on the horizon, they will likely proceed with caution. Concerns over persistently high inflation, especially in the services sector, remain a key issue for policymakers. For now, November is still seen as the most likely time for the next rate cut, but the path forward is far from set in stone.

Meanwhile, US markets seem to have come to terms with yesterday's 50 bps rate cut by Fed. Stock futures point to a sharp rally, with both DOW and S&P 500 poised to hit new all-time highs. At the same time, 10-year Treasury yields surged past 3.75%. Fed fund futures now price in a 67% chance of a smaller 25bps cut in November. The mix of rising stock prices, higher yields, and fed pricing reflects the market's confidence in Fed's strategy, with Jerome Powell having successfully conveyed that the aggressive rate cut was a preemptive measure rather than a panic reaction to economic weakness. Investors remain optimistic even with a gradual pace of easing moving forward....

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GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.3145; (P) 1.3221; (R1) 1.3290; More...

Intraday bias in GBP/USD remains on the upside at this point. Current rally should target 61.8% projection of 1.2664 to 1.3265 from 1.3000 at 1.3371 in the near term. Firm break there will pave the way to 100% projection at 1.3601 next. On the downside, however, break of 1.3145 support will turn bias to the downside for deeper pullback to 1.3000 support next.

EURUSD | USDJPY | GBPUSD | USDCHF | AUDUSD | USDCAD

EURJPY | EURGBP | EURCHF | EURAUD | GBPJPY

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