The anticipated pace of interest rate cuts is escalating in the market for the upcoming year, driven by decreasing inflation and a shift in focus toward stimulating economic growth by central banks.

The Bank of England is convening this week, and the current expectation is for no changes until approximately mid-2024, marking the commencement of a rate-cutting cycle. Presently, markets are factoring in nearly 75 basis points of cuts.

Despite the Bank's commitment to a 'higher for longer' approach, supporting the strength of the pound, we anticipate a divided vote on the rate decision.

In the United States, the recent release of weaker job data has reinforced the belief that the Federal Reserve will need to implement aggressive rate cuts starting early next year to counteract a weakening economy. No policy changes are expected at this week's meeting.

The highly significant US payrolls data, scheduled for today, serves as a crucial indicator of the underlying economic performance and holds substantial influence over central bank policy, potentially contributing to short-term volatility.

The European Central Bank is also set to convene this week, and it is anticipated to maintain its current stance. Market forecasts suggest they might be the first to initiate monetary policy easing, possibly as early as March, given the ongoing disappointing economic data and the drag from the weakening growth outlook for China on the European economy.

Geopolitical factors are increasingly becoming a key driver of market sentiment for the upcoming year, as evidenced by Gold reaching a record high this week.

As we approach year-end, liquidity is expected to diminish, potentially resulting in exaggerated market movements.