London, UK – European markets are set to open mixed today as investors eagerly await the Bank of England’s interest rate decision, expected to be announced at midday London time. Market pricing suggests a 25 basis point interest rate cut, marking the beginning of the Bank of England’s monetary easing path.
Key points to consider:
– Interest Rate Cut: A 25 basis point cut is expected, but uncertainty surrounds the decision due to concerns over service sector inflation and wage growth.
– Inflation Concerns: Despite inflation holding at 2%, some voting members remain cautious, adding uncertainty to the decision.
– Global Central Bank Actions: The Bank of England’s meeting follows the U.S. Federal Reserve’s decision to hold rates and the Bank of Japan’s surprise move to raise its benchmark interest rate.
– Earnings Season: European technology stocks have posted strong gains, and companies like Shell and Barclays are reporting today.
The Bank of England’s decision will have significant implications for the UK economy and global markets. Investors will be watching closely for any signals on future monetary policy.
Market Data:
– FTSE 100: Expected to open slightly higher
– DAX: Expected to open flat
– CAC 40: Expected to open slightly lower
– EUR/GBP: 0.8450
– GBP/USD: 1.2100
No Rate Cut: The Bank of England decided to keep interest rates unchanged at 5.25% during its meeting on August 1, 2024 ¹.
Voting Decision: The decision was made with 8 members voting to keep rates on hold and 1 member, Dhingra, voting to cut rates by 25 basis points ¹.
Future Cuts Possible: Although rates were left unchanged, Governor Andrew Bailey acknowledged that circumstances are progressing in a favorable direction, leaving room for potential future cuts ¹.
-Inflation Concerns: The Bank of England cited significant indicators of inflation persistence as a reason for keeping rates unchanged, despite a reduction in the bank rate ¹.
Market Reaction: Following the decision, GBP/USD retreated from the area of earlier tops around the 1.2800 region to the 1.2730 zone, where some initial support seems to have emerged ¹.
