Major Central Bank Decisions Dominate the Week Ahead.

Written By Alex Iakovides

This week marks one of the most significant periods of the year for global monetary policy, with interest rate decisions due from the US Federal Reserve and the Bank of England. Last week's softer-than-expected US inflation data has solidified market expectations for the Fed to begin its rate-cutting cycle. Investors will now be intensely focused on the forward guidance from these central banks, which is set to drive market direction for the weeks to come.

The Pound Sterling faces a critical 24-hour period of event risk. First, the latest UK inflation data is due on Wednesday, which will be a crucial final input for the Bank of England. This is followed on Thursday by the BoE's own monetary policy decision. The interplay between these two events will be the primary driver of the Pound's performance and could lead to significant volatility.

The US Dollar is trading under pressure ahead of the Federal Reserve's policy announcement on Wednesday. A 25-basis-point interest rate cut is now widely anticipated by the market; therefore, the focus will not be on the cut itself, but on the Fed's updated economic projections (the "dot plot") and the tone of Chair Powell's press conference. These will provide vital clues about the likely pace of future easing.

The Euro is set to be influenced by the major decisions from the Fed and the BoE, as well as the release of timely business activity data at the end of the week. The flash PMI surveys from across the Eurozone will offer a fresh snapshot of the bloc's economic health and could impact the European Central Bank's outlook, particularly in relation to the policy paths of its global counterparts.

Events to Watch This Week:

⦁ Wednesday, September 17: UK CPI Inflation & US Federal Reserve (FOMC) Policy Decision

⦁ Thursday, September 18: Bank of England (BoE) Policy Decision

⦁ Friday, September 19: Global Flash PMIs & UK Retail Sales

The stage is set for a landmark week in financial markets. The policy decisions and forward guidance from the Federal Reserve and the Bank of England will be instrumental in shaping the investment landscape. Investors should be prepared for heightened volatility as the market digests these pivotal announcements.

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Alex Iakovides https://risemedia.digital
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