Powell pushes back on the doves

Market reports
Thanim Islam
  • Powell suggests another hike could be on the cards
  • UK GDP surprises but still concerning

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GBP initially tried to claw some gains this week, after BoE chief economist Huw Pill almost backtracked on his comments from earlier in the week when he implied we could see interest rate cuts in 2024. His comments yesterday suggested that interest rates will need to stay higher for longer. However, despite those comments and the higher risk appetite in the markets, GBP still declined with money markets still keeping their bets on for rates coming in from August 2024.

We had another deluge of Fed speak today, attempting to counter the markets dovish thoughts on future Fed policy. This continued into the evening when Fed chair Powell suggested not to read too much into softer inflation numbers, and that another rate hike could not be ruled out. Treasury yields spiked, equities dropped and USD continued to gain.


Market rates

* Daily move - against G10 rates at 7:30am, 10.11.23

** Indicative rates - interbank rates at 7:30am, 10.11.23

Table - 2023-11-10T095543.484

Data points

Table - 2023-11-10T095545.149


  • None today.

Our thoughts

UK GDP came in better than expectations this morning, surpassing the expectation of contracting by 0.1% Q3. But the numbers weren’t really anything to celebrate, with growth coming in at 0%, and delving deeper into the data the domestic components of the numbers were in fact negative. GBP continues to trade lower as a result. Quiet rest of day, with just the University of Michigan sentiment figures in the afternoon. Following on from Fed Powell's speech, the USD is likely to gain to finish the week higher.

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