As expected the Fed announced they would cut interest rates by 25 basis points. This is the second time they've done so since 2008, with the first time only being earlier this year. One major point to note, is they've left the door open to further rate cuts later in the year.
Hinting that the FED will be looking at their monetary policy to protect against any signs of slowing growth in the global economy. Mr Jerome Powell, chair of the Federal Reserve did end the day on a somewhat positive note, insisting they would only intervene should the markets slow.
Unfortunately, not everyone took too well to the interest rate cuts. With Donald Trump blasting the Fed by tweeting that Powell and his colleagues have "no guts, no sense and no vision!". The President did have some reason to question it, the US economy has shown mixed growth across each sector, with manufacturing activity slowing but the service sector accelerating and wage growth doing so with it. However, given the rate cut was already priced in, the markets showed little change.
It’s now the Bank of England’s turn to release their interest rate decision, which unlike the US is expected to remain unchanged at 0.75%. Today will be the last time they will meet before the Brexit deadline of the 31st October – should the UK leave with a deal in place the BOE has said ‘it would be appropriate to raise interest rates to cool down activity in the economy’.
Finnish PM Antti Rinne said he and French President Emmanuel Macron agreed the UK must have proposals on paper by the end of September, adding if not, "then it's over". A reoccurring theme by the EU is that the UK had failed to put any plans in writing, even though it has put a number of proposals forward.
In the meantime, today marks the final day of a 3 day hearing, to decide if Boris Johnson had unlawfully shut down parliament. Should he lose this case it will force his hand to rethink any current strategy in pushing Brexit over the line.
The currency pair remains within the same trading range since the start of the week with highs of 1.1070 and lows around the 1.1010 level. EURUSD is currently trading just under 1.1050 but with a recovery since the Fed rate announcement Wednesday evening, we could see this continue to test the 1.070 level.
GBPUSD & GBPEUR
After momentarily testing the 1.13 level overnight movements in sterling are likely to be driven from the UK today with the Supreme Court ruling expected along with Retails Sales figures at 9:30am and the BOE releasing their interest rate decision and statement at midday.
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