What are the main events for today?

In the European session the highlight will be the BoE rate decision where the central bank is expected to cut by 25 bps. In the American session, we get the US Jobless Claims and the FOMC rate decision.

12:00 GMT/07:00 ET – BoE Rate Decision

The BoE is
expected to cut interest rates by 25 bps and bring the Bank Rate to 4.75%. The
UK data recently has been consistently missing expectations and we saw the
central bank’s most watched services inflation measure dropping to 4.9% vs.
5.6% prior.

Further out, the
market scaled back the expectations for a back-to-back cut in December after
the UK budget announcement and the Trump’s election, but if the data continues to soften, we could see
the market increasing the probabilities for a move in December.

13:30 GMT/08:30 ET – US Jobless Claims

The US Jobless
Claims continues to be one of the most important releases to follow every week
as it’s a timelier indicator on the state of the labour market.

Initial Claims
remain inside the 200K-260K range created since 2022, while Continuing Claims
after an improvement in the last two months, spiked to the cycle highs in the
last couple of weeks due to distortions coming from hurricanes and strikes.

These distortions
are fading out as Initial Claims dropped back to the lower bound of the range
and Continuing Claims seem to be turning around.

This week Initial
Claims are expected at 221K vs. 216K prior, while Continuing
Claims are seen at 1880K vs. 1862K prior.

19:00 GMT/14:00 ET – FOMC Rate Decision

The FOMC is
expected to cut interest rates by 25 bps bringing the FFR to 4.50-4.75%. The
economic data has been consistently showing strength in the US economy with
even some acceleration following the latest rate cut.

This led the
market to price out the aggressive rate cuts expectations which now sees the
Fed pausing earlier in 2025 with a bit more than 2 cuts priced in vs. 4 according to the Fed’s
projections.

The red sweep should see the Fed changing its stance and although we will
likely see another 25 bps cut in December anyway, the December cut will likely be a hawkish
one. And, as it usually happens, the market could be even more aggressive in pricing
out the rate cuts.

This article was written by Giuseppe Dellamotta at www.forexlive.com.