Summary:
The pound dropped Wednesday as Putin showed little interest in a ceasefire. Ukraine confirmed Russia entered Dnipropetrovsk's eastern industrial region.
The pound lost ground on Wednesday as Putin seems uninterested in ceasefire. Ukrainian forces have acknowledged that Russia's military has crossed into the eastern industrial region of Dnipropetrovsk.
Money markets shows there is a growing likelihood the BOE will keep interest rates on hold for the rest of the year, after inflation came in at a higher-than-expected 3.8% for July.
Expectations earlier in the summer leaned toward at least one more rate cut in 2025, particularly given lacklustre economic expansion, signs of easing wage growth and trade uncertainty.
But the growth of 3.8% in consumer prices was a touch above the 3.7% consensus. The central bank sees price rises peaking at 4% in September before easing to 3.6% by the year-end.
Services PMI improved to 53.6, up from 51.8 in July and above the market estimate of 51.8. Business activity rose for a fourth straight month and hit its fastest pace in a year.
A former BOE rate-setter warned Rachel Reeves' tax-and-spend gamble is driving Britain towards a 1970s-style debt crisis. Tory leader Kemi Badenoch led the calls for the Chancellor to urgently change course.
Sterling has been consolidating below 50 SMA, and the pennant pattern suggests an upside breakout is more than likely than not going forward. However, it may notch some small losses in the short run.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
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