Dear Reader,

Today's overview of economic news and market action:

• • Risk appetite soured yesterday as markets continued to digest the Fed meeting …
  • Meantime, BoE surprised markets by leaving rates unchanged …
  • Sterling weakened following the BoE policy decision …
  • Sees GBP/USD back below the $1.23 threshold …
  • EUR/GBP is in the top half of 86-87p …
  • EUR/USD remains in the $1.06-1.07 range …
  • Today, the flash PMIs (Sep) in the US, Eurozone and UK are due …

Fed leaves rates unchanged in a hawkish hold

As had been well signalled, the US Fed left official interest rates unchanged at the conclusion of its policy meeting.Thus, the target range for the funds rate remains at 5.25-5.50%. 

Markets Expect ECB Rate Cuts in 2024

Markets are of the view that we have seen the final ECB rate hike, following last Thursday’s 25bps increase, which brought the key deposit rate up to 4%.

ECB Depo rate hits 4%, likely to be the peak

The September meeting of the ECB’s Governing Council saw the Central Bank raise rates by a further 25bps, pushing the key deposit rate up to 4.00%.

Recession Required for Rate Cuts

Markets are of the view that we have seen the last ECB rate hike, following Thursday’s 25bps increase, which brought the key deposit rate up to 4%.