Daily digest market movers: Pound Sterling follows US Dollar’s footprints
- The Pound Sterling trades in a tight range slightly above 1.2600 as investors look for fresh cues about when the Bank of England will start reducing interest rates. The market expectations for the BoE pivoting to rate cuts have come forward to the June meeting as the central bank was seen as slightly dovish in its latest monetary policy statement.
- The BoE sounded dovish as none of the policymakers voted for a rate hike. This indicates that BoE policymakers see current interest rates as restrictive. Policymakers do not see more interest rate hikes appropriate when they are worried that further policy tightening could dampen the economic outlook or they see progress in inflation declining to the 2% target.
- In addition, BoE Governor Andrew Bailey said in its latest monetary policy statement that market expectations for two or three rate cuts this year are “appropriate,” boosting expectations for the BoE to cut interest rates from June.
- On the economic front, investors will focus on the United Kingdom’s S&P Global/CIPS Manufacturing PMI final data for March, which will be published on Tuesday. The factory data is forecasted to have remained unchanged from its preliminary reading of 49.9, which came in marginally below the 50.0 threshold that separates expansion from contraction. Investors will keenly focus on the agency’s commentary on businesses’ expectations for the domestic and global demand outlook.
- Meanwhile, the appeal for risk-perceived assets is quite upbeat as S&P 500 futures are positive. Market sentiment has turned cheerful as expectations for the Federal Reserve to begin to reduce interest rates from the June meeting have recently increased.
- In today’s session, investors will focus on the United States ISM Manufacturing PMI for March, which will be published at 14:00 GMT. The PMI is estimated to increase to 48.4 from 47.8 in February.
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