November 2024 Currency Market Review: Disinflation Continues as Bank of England Cuts Rates

November 2024 saw global currency markets respond to further signs of disinflation and a notable policy shift from the Bank of England. While most major central banks kept policy unchanged, the Bank of England’s rate cut and ongoing moderation in inflation shaped expectations for the months ahead. The pound, dollar, euro, and yen all reflected these evolving dynamics.

British Pound (GBP)

The Bank of England’s Monetary Policy Committee (MPC) met on 6 November 2024 and voted by a majority of 8–1 to reduce the Bank Rate by 0.25 percentage points, from 5.0% to 4.75%. One member preferred to maintain the rate at 5.0%. The decision reflected continued progress in bringing inflation down, with UK CPI inflation showing further signs of easing in October (reported in November). Although inflation was moving closer to the 2% target, services inflation and wage growth remained elevated, and economic activity was subdued. The Bank reiterated its data-dependent approach, with markets increasingly expecting further rate cuts in 2025 if disinflation persisted.

Sterling traded steadily, with market participants focused on the implications of the rate cut, inflation data, and forward guidance from the MPC.

US Dollar (USD)

The US Federal Reserve held a policy meeting on 6 November 2024 and kept the federal funds rate unchanged at 5.25% to 5.5%. The Fed acknowledged further progress on disinflation, with US CPI inflation easing, but signalled it would need to see more evidence before considering rate cuts. Labour market data released in November showed continued resilience, though with some signs of softening. The dollar remained stable, with traders awaiting signals on the timing of any policy adjustments in 2025.

Euro (EUR)

The European Central Bank (ECB) did not hold a policy meeting in November 2024, having left rates unchanged at its previous meeting in October. Eurozone inflation data published in November showed further progress towards the ECB’s 2% target. Business sentiment and PMI surveys indicated a cautious but stabilising outlook for the region’s economy. The euro traded in a narrow range, reflecting the ECB’s prudent tone and the region’s gradual economic recovery.

Japanese Yen (JPY)

The Bank of Japan (BoJ) did not hold a policy meeting in November 2024. The BoJ maintained its ultra-loose monetary policy stance, keeping its short-term policy rate unchanged. Japanese inflation data released in November showed price growth near the BoJ’s target, while machinery orders and other indicators pointed to modest improvement. The yen remained sensitive to global risk sentiment and speculation about potential policy adjustments in 2025.

Key Economic Events and Releases in November 2024

Central Bank Actions:

• Bank of England: MPC meeting on 6 November, Bank Rate cut from 5.0% to 4.75% (8–1 vote)

• US Federal Reserve: Meeting on 6 November, rates held at 5.25% to 5.5%

• European Central Bank: No meeting in November, rates unchanged

• Bank of Japan: No meeting in November, rates unchanged

Major Data Releases:

• UK: CPI inflation (October data, further easing), labour market, GDP and retail sales updates

• US: CPI inflation, labour market data, retail sales

• Eurozone: CPI inflation, business sentiment, PMIs

• Japan: Inflation, machinery orders, GDP

Outlook

November 2024 reinforced the trend of easing inflation and cautious, data-driven central bank policy. With the Bank of England moving first with a rate cut, and inflation moving closer to target in the UK, US, and Eurozone, markets looked ahead to 2025 focused on the timing and scale of further potential easing. The pound, dollar, euro, and yen all traded in response to shifting expectations, with attention turning to upcoming central bank meetings and economic releases for clearer signals on the policy outlook.