As 2024 dawned, the British pound experienced a decline, approaching $1.26. This movement represented a shift from its five-month high of $1.2827, achieved on December 28th. Investors are currently focusing their attention on the imminent release of US jobs data this week. This data is pivotal, offering clues about the Federal Reserve’s future actions.
In addition, recent PMI data has highlighted a persistent downturn in UK factory activity. December marked the 17th month of consecutive contraction, indicating a deepening in the negative trend. These economic signals are influencing investor expectations.
There is a growing anticipation that the US central bank might commence interest rate reductions as early as March. Projections suggest that these cuts could total over 150 basis points throughout the year. In the UK, traders are contemplating the likelihood of the Bank of England following suit with its own rate cuts in 2024. This speculation occurs despite the stance of BOE Governor Andrew Bailey, who advocates for keeping rates elevated for a longer duration.