October 2024 Currency Market Review: Central Banks Hold Steady as Inflation Data Watched

October 2024 saw global currency markets respond to a steady policy stance from major central banks and ongoing scrutiny of inflation data. The pound, dollar, euro, and yen all reflected these themes, with market participants awaiting signals on the outlook for monetary policy in late 2024 and into 2025.

British Pound (GBP)

There was no Bank of England Monetary Policy Committee (MPC) meeting in October 2024. The Bank Rate remained at 5.0%, as set at the 19 September 2024 meeting, and would not change until the next scheduled meeting in November.

UK CPI inflation for September 2024 (published in October) was 1.7%, continuing a trend of inflation close to the Bank’s 2% target. The Bank of England maintained a data-dependent approach, with policymakers monitoring inflation and growth data ahead of the November decision. Sterling traded steadily, with markets focused on upcoming economic releases and the prospect of policy adjustments later in the year.

US Dollar (USD)

The US Federal Reserve held a policy meeting on 30 October 2024 and kept the federal funds rate unchanged at 5.25% to 5.5%. The Fed acknowledged ongoing progress on disinflation, with US CPI inflation easing further, but signalled it would need to see more evidence before considering rate cuts. Labour market data released in October showed continued resilience, though with some signs of softening. The dollar remained stable, with traders awaiting further signals on the timing of any policy adjustments.

Euro (EUR)

The European Central Bank (ECB) Governing Council met on 24 October 2024 and left its key interest rates unchanged. The ECB noted ongoing progress in reducing inflation, with Eurozone CPI continuing to move closer to the 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.

J​apanese Yen (JPY)

The Bank of Japan (BoJ) held a policy meeting on 31 October 2024 and maintained its ultra-loose monetary policy stance, keeping its short-term policy rate unchanged. Japanese inflation data released in October 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 October 2024

Central Bank Actions:

• Bank of England: No meeting in October, Bank Rate held at 5.0%

• US Federal Reserve: Meeting on 30 October, rates held at 5.25% to 5.5%

• European Central Bank: Meeting on 24 October, rates unchanged

• Bank of Japan: Meeting on 31 October, rates unchanged

Major Data Releases:

UK: CPI inflation (September data, 1.7%), 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

October 2024 reinforced the trend of central bank caution amid subdued inflation and growth. With UK inflation close to target and the Bank Rate unchanged, markets looked ahead to the November MPC meeting for clearer signals on the policy outlook. The pound, dollar, euro, and yen all traded in response to shifting expectations, with attention turning to upcoming economic releases and policy statements as 2024 drew to a close.