ECB holds rates but hints at potential cuts as investors await UK GDP figures

“If only investors possessed a crystal ball, all the speculation about when and if rate cuts might materialise would be put to bed,” says Danni Hewson, Head of Financial Analysis at AJ Bell.

“Sadly, we’re stuck with trying to decipher the vagaries of inflation and pick our way carefully between the lines of central banker comments.

“Today the ECB tantalised us with hints that it might just hit the rate cut button next month, but on the other hand Christine Lagarde stressed they were not pre-committing to action and warned there would be bumps in the road.

“For investors it’s hard to know which way to jump but there’s still been plenty of jumping. London markets seemed to show a spot of profit taking and sleight of hand, with yesterday’s big winner Tesco among today’s losers.

“With another barrage of economic data heading our way tomorrow many investors will be feeling pretty fed up with the roller coaster they’ve been hitched to. But UK GDP figures are expected to be tepid, not too hot or too cold, and unlikely to do much to change thinking at the Bank of England.

“Where just a few months ago markets were betting rates here in the UK could fall below 4% by Christmas now only two cuts are being priced in. The sands are shifting and investors are having to be fleet of foot.”

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