On Wednesday evening, the US Federal Reserve left interest rates unchanged at 2.5 per cent – this was despite pressure from US President Donald Trump to enact a cut. Commenting on this, Dubai-based head of research at ADSS, Konstantinos Anthis said: “[Federal Reserve Chair Jerome] Powell is seeing the glass half full. “What’s more important though is that he made it clear that he sees no case for easing interest rates, which of course will not make President Trump happy at all.” During the Federal Open Market Committee meeting the key message was that it was maintaining a “patient” approach.
Previously, it was thought by analysts that weaker inflation readings would be of concern for the Fed, which could lead to interest rate cuts later this year.
Fed Chair Jerome Powell said: “We did see inflation running persistently below, then that’s something the committee would be concerned about.”
Meanwhile, further data revealed that US job creation smashed forecasts, with the ADP employment change rising by 275,000 in April.
This rise in employment could also mean Friday’s non-farm payrolls for April could rise much higher than expectations.
Meanwhile data revealed that the UK manufacturing PMI slipped from March’s 13-month high to a two-month low of 53.1.
Data showed that overseas demand decreased at the second-fastest pace in the past four-and-a-half years, with Brexit pessimism labelled as the main cause.
Despite this, Sterling rose against the greenback on Thursday.
Later today, the pound could slip against the US dollar following the Bank of England’s interest rate decision and monetary policy meeting minutes.
If the monetary policy meeting minutes reveal the bank’s tone is overly dovish and hints that an interest rate cut could be in the future, Sterling could slide.
Meanwhile, the dollar could rise following the release of March’s US factory orders.
If factory orders rise higher than forecast following February’s contraction, the greenback could edge up once again.