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2025 GBP/USD Outlook Fundamental & Technical PreviewFundamental analysis WHSELFINVEST:GBPUSD showed resilience in 2024, falling just 1% across the year. The pair experienced strong gains between April to September, rising from a low of 1.23 to a high of 1.34. However, GBP/USD fell 5% in the final quarter of the year amid notable USD strength, pulling GBP/USD from 1.34 to the 1.25 level where it trades at the time of writing. While the pound booked losses against the US dollar in 2024, GBP's performance against other major peers was impressive, rising solidly against EUR, CHF, CAD, AUD, and JPY. GBP/USD has been supported across 2024 by the BoE cutting rates at a slower pace than the Federal Reserve and by the expectation that this trend would continue in 2025. However, Donald Trump's victory in the US election, combined with the Labour government’s Budget, means that the outlook for both economies has changed, potentially impacting the direction of monetary policy in 2025 for both central banks and GBP/USD. GBP/USD outlook – UK economic factors Growth The UK economy is expected to continue to grow in 2025. However, GDP could be weaker than the 1.5% forecast by the BoE owing to several key factors, including uncertainty surrounding trade and a less expansionary UK budget. Trump’s second term in the White House brings uncertainty, and UK trade will be under the spotlight. While the UK isn’t directly in the firing line for tariffs, the openness of the UK economy means a global shift towards increased tariffs could hurt growth prospects. However, should the UK pursue and achieve closer ties with the US or the EU, this could help growth but not to the extent of reducing the impact of Brexit. The extent of the indirect impact of trade tariffs on the UK will depend on their magnitude. The UK is already experiencing depressed growth, which Trump’s action could exasperate. The BoE forecasts GDP growth of 0% in Q4 2024 and 1.5% in 2025. The OECD forecasts 1.7% growth, and Bloomberg's survey of economists points to growth of 1.3%. Inflation In November, inflation in the UK was 2.6% YoY, rising for a second straight month and remaining above the Bank of England's 2% target as wage growth and service sector inflation remain sticky. The labour market has shown signs of easing, but unemployment remains low by historical standards at 4.2%, and wage growth elevated at 5.2%. We expect some softening in the UK job market following the Labour government’s first Budget. Chancellor Rachel Reeves placed a major tax burden on employers with a rise in employer National Insurance contributions and an increase in the minimum wage. A broad range of UK labour market indicators point to a weakening outlook, with surveys indicating that UK firms (especially smaller firms) are scaling back hiring plans. Although wage growth and service sector inflation were slightly firmer than expected at the end of 2024, the disinflationary trend remains intact, with core inflation well below last year's highs. The BoE projections show CPI could reach 2.7% in 2025 before easing to 2.5% in 2026. However, this could be lower if the labour market weakens further and if growth remains lacklustre. Will the BoE cut rates in 2025? At the final BoE meeting in 2025, the BoE left interest rates unchanged at 4.75%, in line with expectations. However, the vote split was more dovish than expected, at 6-3 compared to the 8-1 forecast. This suggests that dovish momentum is building within the monetary policy committee for a rate cut in February. The central bank signaled gradual, rare cuts throughout 2025 amid sticky inflation, although policymakers are increasingly concerned over the growth outlook. The market is pricing 50 basis points worth of cuts in 2025, supporting the pound. However, this could be conservative given that the labour market could weaken considerably following the Budget. A weaker labour market will lower wage growth and impact consumption, potentially cooling inflation faster. Uncertainty surrounding trade could ease inflationary pressures further in 2025, meaning deeper cuts from the BoE than the market is pricing in. As a result, GBP could come under pressure across H1 2025. GBP/USD outlook - US economic factors USD strength was nothing short of impressive in Q4. The USD index jumped 5% to reach a two-year high, supported by expectations that the Federal Reserve could cut rates at a slower pace in 2025. Despite the outsized move in Q4, we expect further USD strength in 2025. At the time of writing, US CPI has risen for the past two months, reaching 2.7% YoY in November. Core PCE is also proving to be sticky, remaining above the Federal Reserve's 2% target. Earlier confidence at the Federal Reserve that inflation would continue falling to the 2% target appears to have faded amid ongoing US economic exceptionalism and a cooling but not collapsing labour market. Signs of sticky inflation come as the US job market remains resilient. Nonfarm payrolls for November showed 227k jobs were added. Unemployment has ticked higher but is expected to end 2025 at 4.3%, down from 4.4% previously expected. Meanwhile, economic growth in the US remains solid. The US recorded Q3 GDP as 3.1% annually, up from 2.8% in Q2. According to the OECD, the US is expected to see strong growth among the G7 economies, with 2.8% growth expected in 2024 and 2.4% forecast for 2025. A combination of sticky-than-expected inflation, solid growth, and a resilient jobs market suggests that the US economy is on a strong footing as Trump comes into power. Political factors Trump is widely expected to implement inflationary measures, including tax cuts and trade tariffs. Inflationary policies at a time when US inflation is starting to heat up again could create more of a headache for the Federal Reserve continuing with its easing cycle. Will the Federal Reserve cut rates in 2025? At its last meeting of 2024, the Federal Reserve cut interest rates by 25 basis points, marking the second consecutive 25-basis-point cut and following a 50-basis-point reduction in September, when it kicked off its rate-cutting cycle. However, the Fed also signaled slower and shallower rate cuts in 2025. Fed Chair Powell’s press conference and policymakers’ updated projections confirm that the Fed will be much more cautious next year. The Fed increased its inflation forecast to 2.5% YoY, up from 2.1%, and isn’t expected to reach 2% until 2027. The market is pricing in just 35 basis points worth of cuts next year, and the first rate cut isn’t expected until July. However, Trump’s policy plans will be the most significant determinant of the Fed's decisions regarding rates next year. Technical analysis Overview The GBP/USD pair has been in a clear downtrend since its peak in May 2021, marked by a swing high of ~1.4205 and a subsequent low of ~1.1800 in September 2022. The recent price action suggests the pair is consolidating near key psychological and technical levels, hinting at potential future moves. This analysis incorporates a refined Fibonacci retracement that spans the broader bearish cycle for a more holistic perspective. Long-Term Fibonacci Analysis The updated Fibonacci retracement has been applied from the May 2021 high of ~1.4205 to the September 2022 low of ~1.1800. This adjustment provides a better representation of the long-term market structure and aligns key levels with historical price reactions: 23.6% Retracement Level (~1.4007): This level aligns closely with the psychological 1.4000 level, making it a key resistance area should the pair see a bullish recovery. 38.2% Retracement Level (~1.3884): This level historically coincides with areas of consolidation and resistance, suggesting it could act as a ceiling for mid-term rallies. 50% Retracement Level (~1.3785): Situated near prior structural highs, this is a crucial midpoint for evaluating the strength of any bullish correction. 61.8% Retracement Level (~1.3660): Often referred to as the "golden ratio," this level aligns with significant historical resistance, further reinforcing its importance. 78.6% Retracement Level (~1.3548): This deeper retracement could serve as an area of rejection in a bullish recovery scenario. Short-Term Impulse Fibonacci Analysis Focusing on the most recent bearish impulse, the Fibonacci retracement spans from the swing high of 1.3170 (August 2023) to the recent low of 1.2384. Key levels from this retracement include: 23.6% Retracement Level (~1.2612): The price has hovered around this level recently, suggesting it acts as a local resistance point. 38.2% Retracement Level (~1.2785): This level is bolstered by confluence with horizontal resistance, making it a critical test for bullish momentum. 50% Retracement Level (~1.2850): Represents a midpoint and potential short-term rejection area. 1.618 Fibonacci Extension (~1.2139): This provides a logical downside target should the bearish trend continue. 3.618 and 4.236 Extensions (~1.1164 and ~1.0644): These deeper levels indicate the potential for significant bearish continuation in the long term. Other technical indicators Moving Averages The 21-week SMA (~1.2924) remains above the current price, acting as dynamic resistance. The 50-week SMA (~1.2785) coincides with the 38.2% retracement of the recent impulse, reinforcing its importance. RSI and MACD The RSI (47.96) is below the midpoint of 50, indicating bearish momentum. Watch for divergence near key Fibonacci levels. The MACD histogram is negative, with no signs of an imminent crossover, confirming bearish pressure. Support and Resistance Zones Key Resistance Levels 1.2612: Recent price interactions suggest this is a significant short-term barrier. 1.2785: The 38.2% retracement of the impulse move, coinciding with the 50-week SMA. 1.3000: A psychological level with historical significance. 1.4000: The 23.6% retracement of the broader move and a long-term target for bullish recovery. Key Support Levels 1.2384: The recent swing low. 1.2139: The 1.618 extension of the recent impulse move. 1.2000: A critical psychological threshold. 1.1164 and 1.0644: Deeper Fibonacci extensions providing long-term bearish targets. Conclusion The GBP/USD pair remains in a bearish trend, with key levels from the updated Fibonacci retracement offering valuable insights for both potential reversals and continuation scenarios. Traders should monitor the interaction of price with the 1.2612 and 1.2785 resistance levels, while keeping an eye on the downside targets of 1.2139 and below. The RSI and MACD confirm bearish momentum, while moving averages provide additional context for dynamic support and resistance. A multi-timeframe approach will be crucial in navigating this pair over the coming months, with the broader trend still probably favoring the bears. -- written by Fiona Cincotta & WH SelfInvest
Short
by WHSelfInvest
GBPUSD - Dollar, waiting for the release of the CPI index?!The GBPUSD currency pair is located between EMA200 and EMA50 in the 4H timeframe and is moving in its upward channel. The continuation of the trend of this currency pair will depend on the maintenance or failure of this channel. If the upward trend continues due to the release of today's economic data, we can see a supply zone and sell within that zone with a suitable risk reward. In case of channel failure and downward correction, you can buy this currency pair within the specified demand zone. According to a new report by the Federal Reserve Bank of New York, consumer inflation expectations in the United States showed some changes in November compared to October. One-year inflation expectations rose to 3%, up from 2.9% last month. Additionally, three-year inflation expectations reached 2.6%, slightly higher than the 2.5% recorded in October. Five-year expectations also edged up from 2.8% to 2.9%. The Federal Reserve’s survey indicates that participants anticipate a decline in costs for gasoline, rent, and food over the coming year. Expectations about future government borrowing have also dropped significantly. The report further highlights that many respondents are optimistic about their financial situation improving next year. This positive outlook has reached its highest level since February 2020. Janet Yellen, the U.S. Treasury Secretary, has warned that Donald Trump’s tariff plans could disrupt prior efforts to curb inflation and lead to higher consumer prices. Speaking at the Wall Street Journal’s CEO Council, she stressed that broad tariffs could increase costs for American consumers and businesses dependent on imports. Meanwhile, the U.S. dollar has performed impressively this year, supported by strong economic conditions. However, Morgan Stanley analysts, including David Adams, caution that holding long positions on the dollar may now be a mistake as the currency faces downside risks. Bloomberg reports that while efforts to combat inflation have been largely successful, lingering price pressures could undermine confidence in further interest rate cuts. Reuters has reported that the Bank of England intends to maintain its cautious stance and keep interest rates steady. Simultaneously, the European Commission has advised EU member states against granting the UK greater access to the bloc’s electricity market. This recommendation comes despite warnings from the energy sector about higher costs for consumers and slower progress toward green energy transitions. In a policy document outlining the EU’s stance on future negotiations with the UK, the European Commission emphasized that the principle of “limited choice” should also apply to electricity trade. The document noted that the UK’s decision not to rejoin the single market has restricted deeper cooperation in the energy sector, and partial participation in this market would neither benefit the EU nor align with the European Council’s guidelines. In October, British and European energy companies called for a revision of post-Brexit energy trade arrangements to establish a “green energy hub” in the North Sea. They warned that the current framework is not only inefficient but also jeopardizes shared commitments to generate 310 gigawatts of offshore wind power by 2050. On Monday, the U.S. and UK announced a fresh wave of sanctions targeting what they described as the illicit gold trade. The UK claimed that this trade finances Vladimir Putin’s war efforts in Ukraine and fuels corruption. The British government froze the assets of four individuals accused of gold smuggling, as well as another individual who had purchased over $300 million worth of Russian gold, generating revenue for the Russian government. In a statement, the UK’s Foreign Office said: “Illicit gold trade is an attack on the legitimate trade of a valuable commodity, fueling corruption, undermining the rule of law, and enabling human rights abuses, including child labor.”
Long
by Ali_PSND
The BoE's interest rate cut path is becoming unclear. Bloomberg Economics reports that the Bank of England (BoE) is unlikely to keep cutting interest rates after 2025 due to an overheating economy and the risk of rising inflation. While BoE Governor Bailey anticipates four 25bp cuts next year, markets are skeptical about the central bank's ability to further reduce rates without igniting inflation. GBPUSD continues its uptrend, holding above the trendline. Both EMAs widen the gap, indicating a bullish momentum. If GBPUSD holds above the trendline, the price could gain upward momentum toward the resistance at 1.2850. Conversely, if GBPUSD breaks below the trendline, the price may retreat to the support at 1.2715, where EMA78 coincides.
by inkicho_exness
EURGBP - The weakness of the euro will end!?The EURGBP currency pair is below the EMA200 and EMA50 in the 4H timeframe and is moving in its descending channel. In case of breaking the resistance area, we can see the supply zone and resell in that zone with appropriate risk reward. A valid break of the drawn support area will provide us with the downward path of this currency pair to the level of 0.82400. Following Donald Trump’s victory in the U.S. presidential election, the euro experienced a sharp decline. This drop was attributed to market reactions to the possibility of aggressive policies in areas such as trade, immigration, and finance.Past experiences have shown that such policies can significantly impact exchange rates. It is anticipated that the U.S. tariff measures expected in early 2025 will play a crucial role in shaping the direction of exchange rates. The euro, particularly due to Europe’s significant trade surplus with the U.S., is highly vulnerable to these measures. According to statistics, the U.S. trade deficit with the eurozone increased from $158 billion in 2019 to $196 billion by September 2024. This development could serve as motivation for U.S. policymakers to apply further pressure. Another factor that might weaken the euro is the poor performance of eurozone countries in meeting NATO’s defense spending targets. Out of the eight countries that remain below the 2% defense spending threshold, seven are in the eurozone. This could provide Trump’s administration with justification for adopting stricter trade measures. JP Morgan has forecasted that the European Central Bank (ECB) will cut interest rates by 50 basis points during its December 12 meeting. While the market assigns only a 20% probability to this reduction, JP Morgan believes that such a cut would not suffice to bolster the economy. Data indicates that the preliminary estimate for overall consumer inflation dropped from 2.8% to 2.7%, while core inflation rose from 2% to 2.3%. Villeroy, a member of the ECB, dismissed these changes as insignificant. In his speech, he stated: “We have good news; inflation is decreasing and moving toward our target. Therefore, it is likely that we can continue reducing interest rates.” He added, “We are confident in our projections and expect to achieve our inflation target, possibly in the first half of next year.” Christine Lagarde, President of the ECB, in an article for The Economist, discussed how Europe’s savings can be transformed into investments, innovation, and growth. She highlighted that Europe faces numerous economic challenges and that directing savings toward productive investments is essential to stimulate growth. Lagarde emphasized the need for a strong capital markets union in Europe to better allocate financial resources and improve access to capital for innovative companies. She also stressed the importance of structural reforms to enhance the business environment and encourage entrepreneurship. She pointed to the role of coordinated fiscal and monetary policies in supporting sustainable and innovative investments and underscored the importance of cooperation among EU member states in achieving these objectives. Additionally, she called for the establishment of a stable and predictable legal and regulatory framework to boost investor confidence and drive economic growth. A recent Cluster17 survey revealed that around 54% of French citizens want President Emmanuel Macron to resign and for early presidential elections to be held in 2025. The survey also showed strong public polarization regarding the collapse of the Barnier government, highlighting the inability of political parties to unite voters. Political analyst Stéphane Fournier noted that these results increase pressure on Macron to appoint a new prime minister. The findings also reflect public dissatisfaction with the current political situation and the failure of parties to provide effective solutions to the ongoing crisis. According to a recent Reuters survey of economists, 73 out of 75 economists predict that the ECB will cut the deposit rate by 0.25% during its December meeting. Two others anticipate a 0.5% cut. Moreover, 51 out of 67 economists expect the ECB to reduce the deposit rate to 2% or lower by the end of 2025. Notably, in a November survey, 43 out of 63 economists made the same prediction.
Short
by Ali_PSND
British pound rises as UK Construction PMI jumpsThe British pound has extended its gains for a third straight trading day. In the North American session, GBP/USD is trading at 1.2757, up 0.45% on the day. The UK Construction sector rose to 55.2 in November, up from 54.3 in October and above the market estimate of 53.4. This indicates strong expansion but the report contained mixed figures. Commercial work sparkled as it jumped to its highest level in 2.5 years. On the other side of the coin, residential work fell to its lowest level since June, as home-building was been dampened by high interest rates and weak consumer confidence. The UK economy is fragile, with a stagnant services sector and manufacturing in contraction mode. The Bank of England has joined the easing cycle and has lowered rates twice this year, with the last cut in November. The BoE meets on Dec. 19 and is widely expected to hold the cash rate at 4.75%. The markets have priced in three rate cuts in 2025 and there was some surprise when BoE Governor Bailey hinted on Wednesday that the central bank was looking at four rate cuts if the BoE’s inflation projections proved correct. Bailey noted that inflation had fallen one percent lower than the BoE forecasted a year ago. Bailey’s optimistic stance on inflation means that the BoE could be aggressive in its rate-cutting cycle in 2025. With US inflation largely contained, the nonfarm payroll release has again become one of the most significant economic releases on the calendar. The November report is expected to rise to a respectable 200 thousand, after a weak gain of 12 thousand in October, which was driven downwards by hurricanes and work stoppages at Boeing. GBP/USD tested resistance at 1.2737 earlier. The next resistance line is 1.2775 1.2684 and 1.2646 are the next support levels
by OANDA
GBPNZD - The pound, in relative peace!The GBPNZD currency pair is located between EMA200 and EMA50 in the 4H timeframe and has left its downward channel. In case of a downward correction, we can see demand zone and buy this currency pair in that zone with a suitable risk reward. According to recent data, the UK’s economic indicators have shown various changes. M4 money supply, a key economic measure, has declined by 0.1%, compared to the previous figure of 0.6%. This drop may reflect reduced liquidity in the economy. In the area of consumer credit, the Bank of England reported that this metric reached £1.098 billion, lower than the forecast of £1.3 billion and the previous figure of £1.231 billion. This may indicate a decline in consumer demand for credit. Meanwhile, significant growth has been observed in the mortgage sector. Mortgage lending rose to £3.435 billion, surpassing the forecast of £2.7 billion and the previous figure of £2.541 billion. This increase suggests an improvement in the housing market and growing demand for mortgages. Additionally, the number of approved mortgages reached 68,303, exceeding the forecast of 64,500 and the previous figure of 65,647. This growth further highlights increased confidence and momentum in the housing market. Andrew Bailey, the Governor of the Bank of England, has addressed the financial and economic state of the UK, highlighting key concerns. He warned that price corrections could disrupt financing but expressed confidence that households and businesses would remain resilient against economic challenges. He also predicted that the UK’s economic growth would continue “sustainably.” Bailey pointed to heightened global risks and uncertainties while emphasizing that there is no conflict between financial stability and economic growth. Additionally, he noted that geopolitical risks remain elevated. According to Bloomberg and a CBI survey, tax pressures on UK businesses have caused a significant decline in the private sector. For the first time in two years, the budget has been identified as the main reason for reduced business activity. Companies have warned that hiring plans are at their weakest level since the COVID pandemic. Business activity in the UK has been declining for the first time in over two years as firms reduced jobs and limited investments following the October budget. According to the Confederation of British Industry’s (CBI) monthly growth index, a £26 billion ($33 billion) increase in payroll taxes and prolonged uncertainty caused by a three-month wait for the next budget after the Labour Party’s decisive victory in the July 4 election have significantly impacted private sector sentiment. The UK plans to review the design of its new labor survey in the spring. The Office for National Statistics (ONS) reported that overall employment levels are now 313,000 higher than before the COVID pandemic. The economic inactivity rate has decreased by 0.1% to 22.1%, while the unemployment rate has remained steady at around 4.2%. Employment rates for the period from April to June 2024 increased by 0.1%, reaching 74.6%.
Long
by Ali_PSND
GBPJPY - Yen will continue to grow?!The GBPJPY currency pair is below the EMA200 and EMA50 in the 4H timeframe and is moving in its downward channel. If it continues to move towards the demand zones, we can buy with a suitable risk reward. The upward correction of this currency pair towards the supply zone will provide us with the next selling position. Higher inflation in Tokyo has increased the likelihood of a Bank of Japan interest rate hike in its December meeting. The Cabinet Office of Japan released its September economic report, maintaining its overall assessment of the country’s economic condition. According to the report, Japan’s economy continues to recover at a moderate pace. The report also highlighted an improvement in bankruptcy conditions, marking the first positive trend in this area in 42 months. This improvement reflects greater stability within Japan’s business sector. Furthermore, the report noted a slowdown in the rise of corporate product prices, which could lead to a more balanced market. The Cabinet Office emphasized the need to closely monitor U.S. economic policies, as shifts in these policies could significantly impact Japan’s economy. Analysts at JP Morgan predict that the Bank of Japan will raise interest rates twice in 2025, in April and October, bringing its policy rate to 1.0% by the end of the year. Additionally, they forecast two further rate hikes in 2026, pushing rates to 1.5%. JP Morgan noted that the Bank of Japan’s independent monetary policies could result in weaker performance for Japanese yields compared to other developed markets. Meanwhile, the Japan Manufacturing Workers Union, representing small and medium-sized manufacturing enterprises, has demanded a minimum base wage increase of 15,000 yen in next year’s wage negotiations. This request exceeds last year’s demand by at least 3,000 yen and marks the highest wage increase proposed in the union’s history. The ultimate goal is to achieve an overall wage increase exceeding 19,500 yen. This development could be seen as positive news for Japan’s government and central bank, as rising wages might indicate mounting inflationary pressures, supporting the normalization of monetary policies. Tamaki, a member of Japan’s Democratic Party for the People (DPP), stated that the Bank of Japan should evaluate its policies based on wage outcomes for small businesses. He warned that excessive tightening of monetary policy could risk a return to deflation. Tamaki stressed the importance of not rushing changes in monetary and fiscal policies. In the UK, Finance Minister Rachel Reeves announced a £26 billion ($33 billion) business tax hike that could result in the loss of up to 130,000 jobs. If employers pass this financial burden onto the workforce by reducing employment, the unemployment rate could increase by 0.4%. The analysis also suggests that businesses might respond to higher employer national insurance contributions by cutting working hours or staff. Separately, the Bank of England recently reported results from its latest stress tests, indicating that all major UK financial institutions are resilient enough to withstand worst-case economic scenarios. While the results have not raised specific concerns, the Bank emphasized its commitment to ongoing close monitoring of the situation.
Short
by Ali_PSND
EURGBP - Interest rates will stay high for a long time!?The EURGBP currency pair is below the EMA200 and EMA50 in the 4H timeframe and is moving in its downward channel. In case of a valid failure of the ceiling of the channel, we can see a supply zone and resell within that zone with a reward for the appropriate risk. The breaking of the drawn upward trend line will provide us with the path for the downtrend of this currency pair to the support range. According to expert analysis, President-elect Donald Trump’s commitment to imposing tariffs on imports from Mexico to the United States could have a greater negative impact on European automakers like Volkswagen and Stellantis, as well as their suppliers, than any direct tariffs on European Union goods. Should these tariffs be implemented, significant questions would arise regarding the future of global automakers’ operations in Mexico, particularly European manufacturers. Many companies have established factories in Mexico to take advantage of cheaper labor and proximity to the lucrative U.S. market. In response, some automakers may choose to relocate their production facilities to the U.S., abandoning their operations in Mexico. Bernstein analysts stated in a report to clients that Trump’s tariff threats, if enacted shortly after his inauguration in January, leave little time for automakers and suppliers to adjust to major supply chain disruptions. They wrote: “The consequences of tariffs on imports from Mexico and Canada for U.S. manufacturers are so significant that they do not appear to be merely a bargaining tool.” Similarly, Stifel analysts noted that around 65% of the vehicles Volkswagen sells in the U.S. would lose their competitive edge if tariffs on imports from Mexico were applied. Volkswagen’s largest car plant in Mexico, located in Puebla, produced approximately 350,000 vehicles in 2023, including Jetta, Tiguan, and Taos models, all destined for the U.S. market. While automakers and suppliers are exploring various scenarios, predicting future developments remains challenging due to the uncertainty surrounding final decisions. Nick Klein, vice president of Chicago-based OEC, remarked: “Based on past experience, Trump is likely to use the tariff threat as leverage, but predicting his exact actions is difficult.” Christine Lagarde, president of the European Central Bank, has suggested that the European Union should engage in discussions with the U.S. regarding potential tariffs rather than immediately implementing retaliatory measures. Lagarde reiterated previous warnings about the adverse effects of a full-scale trade war, proposing that the EU could offer to purchase certain U.S. goods as a gesture of willingness to negotiate. She also stated that it is still too early to assess the impact of these tariffs, but if implemented, they might cause short-term inflationary effects. Nagel, a member of the ECB, warned that Trump’s proposed tariffs could increase inflation in the Eurozone, presenting a significant risk. He pointed out that if wage growth slows, upward pressure on prices in the services sector would diminish. He also highlighted that Germany’s economy faces challenges that could lead to a recession in the final quarter of the year, with its economic performance lagging behind the Eurozone average. Philip Lane, ECB Chief Economist, emphasized that restrictive monetary policies should not be maintained for an extended period. In an interview with Les Echos, he advocated for a gradual reduction in interest rates, noting that the rapid rate hikes have curtailed housing investment and encouraged saving over spending. Lane predicted that most inflation targets will be achieved by next year unless new political or geopolitical risks arise. He stressed that monetary policy should not remain excessively restrictive and that further adjustments are needed to achieve stable inflation. Lane also forecasted a rise in consumption during 2025-2026 and called for monetary policy to address both downside and upside risks. Meanwhile, a UBS note revealed that despite stronger-than-expected inflation data in the UK and the Bank of England’s recent rate cut, market sentiment toward the British pound remains bearish. The inflation figures align with BOE Governor Andrew Bailey’s cautious stance, consistent with his recent call for a gradual approach to rate cuts. The BOE’s reduction of the base rate by 25 basis points to 4.75% on November 7 fits within this broader strategy.
Short
by Ali_PSND
GBPAUD - England will continue its economic growth?!The GBPAUD currency pair is located between EMA200 and EMA50 in the 4H timeframe and is moving in its downward channel. In case of failure of this channel, we can see the supply zone and sell within that zone with appropriate risk reward. Continued movement in the channel will pave the way for this currency pair to go down to the demand zones. GBPAUD buy positions can be looked for in two demand zones. Donald Trump, the U.S. president-elect, has threatened to impose a 10% tariff on all Chinese imports starting January 20, the day his presidency begins. In response, China’s embassy in Washington stated on Monday that neither the United States nor China would win a trade war. Liu Pengyu, the embassy spokesperson, said in a statement: “China believes that economic and trade cooperation between China and the United States is inherently mutually beneficial.” In Australia, the monthly CPI index remained unchanged at 2.1% year-on-year in October, falling short of expectations for an increase to 2.5%. This marks the lowest annual inflation rate since July 2021. Core inflation indicators provided mixed signals, with CPI excluding volatile items and holiday travel dropping from 2.7% to 2.4% year-on-year. However, the trimmed mean CPI, the preferred measure of core inflation, rose from 3.2% to 3.5%, reflecting persistent inflationary pressures in certain sectors. Michelle Marquardt, head of price statistics at the Australian Bureau of Statistics, highlighted that declines in electricity and fuel prices had a significant impact on annual CPI. She emphasized the importance of core inflation measures like the trimmed mean in offering deeper insights into inflation trends amid significant price fluctuations. In the UK, according to the latest Reuters poll, house prices are expected to rise by 3.1% in 2025 and 4.0% in 2026. These figures show slight adjustments compared to September’s survey. In London, house prices are projected to grow by 3.0% in 2025 and 4.0% in 2026. October inflation data for the UK exceeded expectations. Headline inflation rose to 2.3%, while core inflation unexpectedly increased to 3.3%, and services inflation reached 5.0%. Rising energy costs and a slowdown in declining goods prices were the primary drivers of this inflation increase. The Bank of England is expected to keep interest rates unchanged in December and cut rates by 25 basis points at its February meeting next year. Overall, the UK’s economic performance appears slightly better than the Eurozone, though it still struggles to achieve sustainable growth and economic recovery. The UK’s manufacturing PMI dropped to 48.6 in November, with the new orders component falling to 47.0. The services PMI also declined to 50.0. These figures suggest that the Bank of England faces challenges not only in controlling inflation but also in improving economic activity, production, and employment. As a result, the central bank is likely to adopt a cautious and measured approach in its policy decisions, at least for the next month.
Long
by Ali_PSND
GBPUSD - The pound, vulnerable to financial policies?!The GBPUSD currency pair is below the EMA200 and EMA50 in the 4H timeframe and is moving in its downward channel. If the downward trend continues due to the release of today's economic data, we can see the demand zones and buy within those zones with the appropriate risk reward. In case of an upward correction, this currency pair can be sold within the specified supply zones. The UK government has quietly abandoned the Conservatives’ plan for managing pension accounts. This plan, introduced by former Chancellor Jeremy Hunt, aimed to address the issue of small, lost pension accounts. However, it faced widespread criticism from the savings industry. Instead, the new government has decided to focus on launching a pension dashboard to help individuals track their missing savings. Additionally, Rachel Reeves, Hunt’s successor, has announced plans for “megafunds” to consolidate the fragmented state of the current pension system. In October, the UK’s public sector net borrowing rose to £17.4 billion, significantly exceeding the £12.9 billion forecast and the previous figure of £16.6 billion. Excluding banking groups, the figure also stood at £17.4 billion, surpassing the earlier estimate of £13.3 billion. This increase in borrowing highlights the government’s growing need for financial resources and could impact future fiscal policies. Natural gas prices in the UK have reached their highest levels compared to European benchmarks since late 2021. This reflects the country’s heightened vulnerability to cold weather due to a lack of large storage sites. While futures contracts have shown little movement, they remain near last year’s peak levels. Additionally, natural gas prices have risen by over 15% so far in November, further emphasizing the fragility of the UK’s gas market. Mann, a member of the Bank of England, has expressed concerns about exchange rate volatility.She described a 1% rate cut as overly aggressive and suggested that decisions on reducing interest rates should be postponed until economic conditions stabilize. She emphasized that significant monetary changes should only occur based on robust data and evidence. Meanwhile, at TD Securities, a team of strategists led by Oscar Munoz and Gennadiy Goldberg expects the Federal Reserve to halt rate cuts in the first half of 2025, as central bank policymakers assess the impact of Trump’s policies. Similarly, interest rate strategists at JPMorgan have adjusted their expectations for the Fed. Broadly speaking, potential conflicts between the Federal Reserve and Trump’s White House seem highly likely, given that Trump’s policies could clash with monetary policies focused on curbing growth and reducing inflation.
Short
by Ali_PSND
GBPNZD - Will the pound continue to rise?!The GBPNZD currency pair is located between the EMA200 and EMA50 in the 4H timeframe and is moving in its downward channel. In case of a downward correction, we can see the demand zone and buy this currency pair in that range with the appropriate risk reward. Breaking the ceiling of the descending channel will provide the way for this currency pair to rise to the specified resistance range. Barclays Institute Remains Optimistic About the British Pound’s Growth Until 2025 Key highlights of the analysis are as follows: • Strengthening ties between the UK and the European Union are expected to provide long-term support for the British economy and pound, boosting its positive outlook. • The financial packages announced by the UK government, amounting to approximately 1% of GDP, have stimulated domestic demand and delayed the Bank of England’s (BoE) interest rate cut cycle. • A critical uncertainty lies in whether higher labor costs will lead to inflationary pressures or a reduction in employment, both of which could impact supply. • The UK’s trade deficit in goods with the United States indicates that, compared to the Eurozone, Britain is less exposed to the direct risks of potential US tariffs. This creates a favorable distinction for the pound over the euro. Barclays predicts that the pound will maintain a positive trajectory through 2025, supported by fiscal resilience, limited exposure to tariff risks, and structural improvements in UK-EU relations. These factors position the pound for gains against both the dollar and the euro, though uncertainties related to labor costs remain a critical factor to monitor. Remarks by Ramsden: Ramsden, a member of the Bank of England, noted that wage growth is more likely to align closer to 2% rather than 4%. He highlighted that the economy is on track to return to normalcy, with inflation stabilizing at a low level and expected to continue this trend. In the short term, inflation is anticipated to remain near the target, while in the long term, it could fall significantly below it. However, the impact of higher social insurance taxes on key economic indicators like prices, wages, and unemployment remains unclear. New Zealand’s Economic Outlook: Meanwhile, New Zealand’s Treasury has forecast a deeper economic downturn, which is placing greater pressure on tax revenues. According to Dominic Stephens, the Treasury’s chief economic advisor, the economic contraction has been sharper than expected, posing serious challenges for the government’s efforts to reduce its budget deficit. Recent evidence suggests that economic and fiscal forecasts, set to be released on December 17, will likely be further downgraded. Data indicates that New Zealand consumers are spending less than they did last year, and businesses remain pessimistic about their economic prospects.
Long
by Ali_PSND
EURGBP - BOE decisions will make the GBP rise!?The EURGBP currency pair is below the EMA200 and EMA50 in the 4H timeframe and is moving in its descending channel. In case of an upward correction due to economic data this week, we can see a supply zone and resell within that zone with a suitable risk reward. Reaching the demand zone of this currency pair will lead to scalp buying opportunities. The UK energy regulator has approved a £2 billion funding package to build a high-voltage “electricity superhighway” beneath the North Sea. This project, known as the “Eastern Green Link 1,” involves laying 196 kilometers of cable to transfer wind power from Scotland to northern England. The initiative is expected to supply electricity to approximately two million homes. Rachel Reeves, the UK’s finance minister, stated that the government aims to achieve broad and resilient economic growth. She also reaffirmed the Bank of England’s target of maintaining a 2% inflation rate. Andrew Bailey, Governor of the Bank of England, noted that inflation in the services sector remains above levels compatible with the inflation target. He stressed the need for close monitoring of this sector, as it reflects labor market developments. Bailey further mentioned that a gradual approach to easing monetary policy restrictions would help manage inflation-related risks more effectively. Meanwhile, the European Commission has warned of heightened risks in its economic outlook due to the war in Ukraine, tensions in the Middle East, and protectionist trade policies. The Commission estimates Germany’s GDP growth to rise by 0.7% in 2025, down from an earlier forecast of 1.0%. Additionally, public debt in the Eurozone is expected to increase from 89.1% in 2024 to 90.0% by 2026. Inflation rates are projected at 2.4% for 2024, 2% for 2025, and 1.9% for 2026. A Bloomberg survey revealed that economists now believe Germany may face a second consecutive year of declining output. Analysts expect Germany’s GDP to shrink by 0.1% in 2024 following a 0.3% contraction in 2023.A month ago, predictions still pointed to an economic slowdown only for this year. Fabio Panetta, a member of the European Central Bank (ECB), stated that persistent weakness in domestic demand might drive inflation below 2%. He suggested that the ECB should consider shifting toward a neutral or even expansionary monetary policy. Panetta noted that the Eurozone economy remains weak, with no turning point visible in the manufacturing sector. He emphasized the need for the ECB to adopt a forward-looking approach, as excessive tightening of current monetary policies is no longer necessary. Robert Müller, another ECB official, remarked that there is no need for larger-scale measures at this time. He also hinted at the possibility of a 25-basis-point rate cut in December.
Short
by Ali_PSND
2
UK inflation expected to jump to 2.2%The British pound is steady on Tuesday. In the North American session, GBP is trading at 1.2678 at the time of writing, unchanged on the day. On Monday, the pound ended a six-day slide, during which the currency lost 2.8%. The Bank of England has done an excellent job slashing inflation, which was in double digits for much of 2023. The September inflation report was a milestone as inflation eased to 1.7%, the first time it was below the BoE target of 2% since April 2021. Still, the BoE is under no illusions that the tenacious battle against inflation is over. Services inflation has fallen significantly but is running at 4.9%, more than double the target. The Trump election win has raised deep concerns that Trump’s trade policy promises, with threats of tariffs on US trading partners, could lead to higher global inflation. The BoE lower rates by 25 basis points on Nov. 7, marking the second rate cut in the current easing cycle. The September inflation report contributed to the decision to lower rates at that meeting and Wednesday’s inflation release will be closely monitored by the BoE, with the following inflation report coming out on Dec. 18, just one day before the BOE’s next rate announcement. BoE Governor Bailey said in a report to the House of Commons Treasury select committee that the BoE needed to keep a close eye on services inflation, which remained above a level that was compatible with “on target inflation”. Bailey also stated that he favored a gradual approach to cutting rates in order for the central bank to assess the effects of the government’s recent budget on growth and inflation. The BoE’s November forecasts indicate that the budget will result in higher growth and inflation in the near term, which could slow the pace of rate cuts. GBP/USD Technical There is resistance at 1.2707 and 1.2736 1.2629 and 1.2658 are the next support levels
by OANDA
GBPJPY - Will the pound continue to weaken?The GBPJPY currency pair is above the EMA200 and EMA50 in the 4H timeframe and is moving in its medium-term bullish channel. If the correction continues to the support range, we can buy with a suitable risk reward. Breaking the resistance range will pave the way for this currency pair to continue its rise. Pension Reforms in the UK • Consolidation of Local Government Pension Schemes: Rachel Reeves, the UK Treasury Secretary, aims to merge local government pension schemes into larger funds (megafunds). This initiative involves pooling the assets of 86 local government pension schemes into a large fund managed by professional investment managers. • Objective: To increase investment in long-term, high-risk assets, reduce management costs, and strengthen investment in infrastructure and local areas. • Further Reforms: In addition, Reeves plans to make changes to financial arbitration services and the combined stock market, marking “the most significant pension reforms in decades.” Inflation Outlook and Interest Rates in the UK • Comments from Bank of England Member, Mann: Bank of England member, Mann, warned that substantial volatility in macroeconomic indicators will be seen in the coming years. He suggests that inflation may remain high for an extended period, necessitating a higher neutral rate. Additionally, he noted that lower interest rates compared to high inflation would put more pressure on investments. Japan’s Support Package and Economic Stimulus • Budget and Household Support: The Japanese government has planned a supplementary budget of 13.5 trillion yen (87 billion USD) to fund an economic stimulus package. This budget includes a payment of 30,000 yen to low-income households and 20,000 yen per child in households with children. • Energy Subsidies: The government will also reintroduce electricity and gas subsidies from January for three months to help households cope with rising fuel and service costs. Financial Risks and Supervision by the Bank of Japan • Concerns About Non-Bank Financial Institutions: The Bank of Japan’s Deputy Governor, Uchida, warned that increased connections between non-bank financial institutions and banks could pose risks to the entire financial system. He emphasized that non-bank institutions handle almost half of global financial intermediation, which requires close attention. Actions for Stability in Japan’s Currency Market • Currency Market Intervention: Japan’s Finance Minister, Katsunobu Kato, stated that appropriate measures will be taken to control severe and one-sided fluctuations in the currency market if necessary. He stressed the importance of sustainable exchange rate movements in line with fundamental principles.
Long
by Ali_PSND
GBPUSD - Is inflation under control in America?!The GBPUSD currency pair is located between EMA200 and EMA50 in the 4H timeframe and is moving in its downward channel. If the downward trend continues due to the release of today's economic data, we can see the demand zones and buy within those zones with the appropriate risk reward. In case of an upward correction, this currency pair can be sold within the specified supply zones. The Governor of the Bank of England noted that the UK’s Consumer Price Index (CPI) does not accurately indicate whether underlying inflation dynamics have been suppressed. There remains a risk of rising energy prices, and inflation within the services sector is notably resilient and persistent. He anticipates greater volatility ahead, with some inflationary drivers potentially shifting upwards. Additionally, according to new data from the Cleveland Federal Reserve, the inflation trend in the U.S. continues to remain above 2 percent. The Median CPI for the previous month was reported at 4.09 percent, a slight increase from 4.08 percent in the prior month. Since June, this measure has only seen a minor decline, from 4.15 percent to the current level. Median CPI is a monthly inflation indicator that measures price changes at the midpoint of a basket of goods. Although this method may differ from the standard CPI, it focuses on items that fall within the midpoint of the distribution. Charts within this report show that other inflation indicators are relatively stabilized, while the decline in the headline CPI is primarily due to a drop in energy prices, which is considered a temporary factor. According to the Federal Reserve Bank of New York, despite ongoing challenges, debt levels remain manageable. Although delinquency rates have risen, income growth continues to outpace household debt growth. In the third quarter, delinquency transition rates varied, with credit card delinquencies improving, while delinquency rates for auto loans and mortgages saw a decline. At the end of Q3, 3.5 percent of debt was in some stage of delinquency, up from 3.2 percent in Q2. Overall delinquency rates also increased during this period. According to the data, credit card balances in Q3 rose 8.1 percent compared to the same period last year, reaching $1.17 trillion, marking an increase of around $24 billion from Q2. Additionally, mortgage balances increased by $75 billion in this period, reaching $12.59 trillion.
Long
by Ali_PSND
GBPAUD: Australia will continue its economic growth?!The GBPAUD is below the EMA200 and EMA50 in the 4H timeframe and is moving in its medium-term bullish channel. In case of upward correction, we can see the supply zone and sell within that zone with appropriate risk reward. The breaking of the upward trend line will pave the way for this currency pair to fall to the demand zone. In this demand zone we can open GBPAUD buy positions. The Fitch rating agency has reaffirmed Australia’s AAA credit rating with a stable outlook, even as it highlighted the country’s higher debt levels compared to similarly rated peers. Fitch stated that Australia remains committed to fiscal sustainability rules, which have contributed to nearly 30 years of economic expansion before the pandemic. Jim Chalmers, Australia’s Treasurer, warned that a potential victory for Donald Trump in the U.S. elections could create short-term economic pressures for Australia, manifesting as lower production and increased inflationary pressures. Chalmers also mentioned that Australia is prepared to face potential challenges from a Trump administration. Chalmers, revealing Treasury’s modeling results that took a Trump victory into account, indicated that there could be a slight decrease in output and additional price pressures. However, the characteristics of Australia’s economy provide it a relative advantage compared to other countries. Meanwhile, Barclays has revised its forecast and now expects the Bank of England (BOE) to keep the bank rate unchanged in December. This change is due to BOE’s more cautious tone and its emphasis on uncertainty and gradual policy moves. Barclays also anticipates that the BOE will reduce interest rates in several 25-basis-point increments over the next year, ultimately bringing the terminal rate to 3.50%. Bloomberg reported that Rachel Reeves, the UK’s Chancellor of the Exchequer, is facing serious challenges just 10 days after presenting her first budget. Rising borrowing costs and weaker economic growth have strained her £9.9 billion fiscal space set aside for her “stability” rule, which mandates that day-to-day expenses should be covered by taxes by 2029-30. Reeves now risks falling short of the Labour Party’s election promise to hold only one fiscal event per year and may need to secure additional funding before the 2025 budget.
Short
by Ali_PSND
GBP/USD falls ahead of UK employment reportThe British pound is lower on Monday. In the North American session, GBP/USD is trading at 1.2870, down 0.33% on the day. The pound is coming of a sixth straight losing week, declining 3.5% during that time. It’s a quiet day on the data calendar, with no US events and only one minor UK release. The UK releases the employment report for the three months to September on Tuesday. Job growth soared by 373 thousand in the prior report, crushing the market estimate of 250 thousand. The labor market is expected to reverse directions, with a market estimate of -50 thousand. As well, the unemployment rate is projected to inch up to 4.1%, up from 4%. Wage growth excluding bonuses is expected to fall to 4.7% in the three months to September, down from 4.9% in the previous report. Wage growth has been easing but is still high and BoE policymakers are concerned about the possibility of a wage-price spiral. The strong growth in wages has contributed to high inflation in the services sector. The BoE holds its final policy meeting in December and Tuesday’s jobs report could impact market expectations. The BoE reduced rates by 25 basis points last week to 4.75% but with inflation falling to 1.7% in September, more rate cuts are likely on the way. A host of Federal Reserve members will deliver remarks on Tuesday and investors will be looking for clues about future rate moves. The Fed lowered rates by 25 basis points last week, a move that was well-telegraphed in advance. What will the Fed do at the December meeting? That is much less clear, as the markets have priced in a pause at 23%, a 25-basis cut at 2.9%, and a 50-basis cut at 22%, according to the CME’s FedWatch. GBP/USD is testing support at 1.2870. Below, there is support at 1.2822 There is resistance at 1.2933 and 1.2981
by OANDA
GBPNZD - How will the BOE decision affect the pound?The GBPNZD currency pair is above the EMA200 and EMA50 in the 4H timeframe and is moving in its medium-term bullish channel. In case of downward correction, we can see the demand zones and buy this currency pair within those zones with appropriate risk reward. The Bank of England has lowered its interest rate by 0.25%, bringing it to 4.75%. According to the Bank’s monetary statement, GDP is projected to grow by 0.2% in Q3 2024 compared to the previous quarter (September forecast: 0.3%) and increase by 0.3% in Q4 this year. The goal is to keep the interest rate restrictive enough until the risks of inflation persistently returning to the 2% target diminish. Andrew Bailey, the Bank of England’s governor, noted that the rate of inflation decline has been faster than expected. However, further reduction in service price inflation is still needed to maintain the consumer price index at the 2% target level, and sufficient spare capacity will be essential to reach this goal in the medium term. The rise in the employer’s national insurance contribution, included in the budget, is expected to have a slightly inflationary effect on prices and a marginally negative impact on wages and corporate profitability. The combined effect of increased employer national insurance and minimum wage is likely to raise hiring costs, with the net impact on inflation yet to be determined. Adrian Orr, the Reserve Bank of New Zealand’s governor, highlighted geopolitical tensions as a significant risk to the economy, expressing concern over the economy lagging behind the interest rate cuts. Orr also emphasized that climate change poses an existential threat to New Zealand, calling for serious attention to this issue. This view reflects deep economic and environmental concerns in the country. The Reserve Bank of New Zealand’s Financial Stability Report indicates that the financial system remains resilient despite the economic downturn, with risks under control. Banks anticipate a slight increase in non-performing loans, although this level remains below what was experienced during previous economic recessions. Debt servicing costs have peaked and are now declining, with mortgage interest rates dropping over the past six months. Although many households and businesses are under financial pressure and some borrowers face challenges with rising unemployment, domestic economic challenges persist.
Long
by Ali_PSND
1
GBP/USD climbs after Bank of England cut ratesThe British pound has rebounded on Thursday. In the North American session, GBP/USD is trading at 1.2983, up 0.81% on the day. A day earlier, the pound took a drubbing, sliding 1.2%. There was no surprise as the Bank of England lowered the key interest rate by 0.25% to 4.75%. The markets had priced in the move at close to 100% and the Monetary Policy Committee voted 8-1 in favor of the cut, with one member voting to hold rates at 5%. The BoE has now lowered rates twice since its easing cycle in August. BoE policymakers had signaled that a rate cut was coming, as September inflation dropped sharply to 1.7%, the first time in over three years that inflation dropped below the BoE’s target of 2%. The central bank is expected to lower rates gradually in modest increments of 25 basis points in the coming months, but last week’s UK budget could complicate things. The budget included tax hikes and increased spending, which is expected to boost inflation. That could mean a pause at the next BoE meeting in December and a slower pace of rate cuts next year. The Federal Reserve meets later today, in the shadow of the dramatic US election, in which Republican Donald Trump cruised to a surprisingly easy victory over Democrat Kamala Harris. The Fed is virtually certain to trim rates by 0.25% to 4.5%-4.75%. With inflation easing, the Fed is expected to continue its rate-cutting cycle into 2025. GBP/USD pushed above resistance at 1.2920 earlier and then tested resistance at 1.3007 There is support at 1.2793 and 1.2706
by OANDA
EURGBP - How will BOE decisions affect the pound?The EURGBP currency pair is below the EMA200 and EMA50 in the 4H timeframe and is moving in its medium-term descending channel. In case of an upward correction due to the meeting of the Central Bank of England today, we can see the supply zones and sell within those zones with appropriate risk reward. Breaking the specified support range will pave the way for this currency pair to continue its decline Britain’s Treasury Secretary, Reeves, stated that it is still too early to make changes to economic forecasts following the U.S. election. He also expressed confidence that trade flows between the UK and the U.S. will continue under Trump’s presidency, noting that during Trump’s previous term, the two nations had a strong and constructive relationship. Reeves showed optimism about Britain’s role in shaping the global economic agenda. Meanwhile, the risk of a German government collapse appears more serious than ever. The German government has entered a new phase of political crisis that could potentially lead to the final breakdown of the ruling coalition. Last Friday, a document from Germany’s Finance Minister, Christian Lindner, was leaked, outlining his plans for economic reform in Germany. This document analyzes the economic challenges facing the country and offers proposals, such as corporate tax cuts and increased working hours. With internal tensions peaking, the likelihood of government collapse has risen. ECB Vice President De Guindos stated that the European Central Bank is committed to a data-driven, meeting-by-meeting approach and is increasingly confident in achieving the 2% inflation target. Goldman Sachs, in its latest report, has lowered its GDP growth forecast for the Eurozone in 2025 to 0.8%, down from the previous forecast of 1.1%. This revision was attributed to potential threats stemming from Trump’s tariff policies following his reelection.
Short
by Ali_PSND
RBA Holds, BoE Expected to Cut in Volatile Week Two major central bank decisions this week join the U.S. election as key events for markets, with interest rate reductions from the Reserve Bank of Australia and the Bank of England being considered. The RBA will announce its decision Tuesday (local time), with economists polled by Reuters forecasting no change to the current 4.35% cash rate. Persistently robust economic activity and sticky core inflation are thought to be keeping the central bank cautious. All major Australian banks—ANZ, CBA, NAB, and Westpac—expect the RBA to hold steady through year-end, projecting the first rate cut to come in February 2025. Meanwhile, the BoE is anticipated to lower its Bank Rate by 25-basis points on Thursday (local time), bringing it to 4.75%, according to a Reuters poll. Last week Britain's finance minister Rachel Reeves unveiled an unexpectedly large increase in borrowing and public spending, which prompted the Office for Budget Responsibility to raise inflation forecasts. However, analysts suggest that these fiscal moves won’t likely disrupt the BoE’s path toward a rate cut this week.
by BlackBull_Markets
BoE's plans for additional rate cuts are in conflict Expectations are mounting that the BoE would implement additional rate cuts. BoE Governor Andrew Bailey has stated that inflation is decreasing more rapidly than anticipated. The UK CPI for September registered at 1.7%, falling short of the central bank's 2% target, which has intensified speculation about upcoming rate increases. Wall Street is convinced that with UK inflation already below the target, there's a strong likelihood of additional rate cuts in November and December following the recent 25bp reduction. However, there are concerns regarding the potential aftereffects of hasty rate cuts. BoE economist Catherine Mann emphasizes that, despite a general slowdown in inflation, service price inflation continues to soar. She warns that an impulsive rate hike could reignite inflationary pressures. GBPUSD advanced to the 1.3000 threshold. After breaching the descending channel’s upper bound, the price holds above both EMAs, signaling a trend reversal. If GBPUSD breaches the resistance at 1.3045, the price may gain upward momentum toward 1.3265. Conversely, if GBPUSD fails to hold above both EMAs, the price may break the channel’s upper bound again and re-enter the descending channel.
by inkicho_exness
GBP/USD drops below 1.30 on soft inflation reportThe British pound has finally showed some movement on Wednesday after a week of limited movement. In the European session, GBP/USD is trading at 1.2992, down 0.62% on the day. The pound fell below the symbolic 1.30 level for the first time since August 20. The UK inflation report for September was projected to hit a milestone and fall below the BoE’s 2% target, but the reading exceeded expectations. CPI fell to 1.7% y/y, down from 2.2% in August and below the market estimate of 1.9%. This was the lowest level since April 2021 and was driven by lower prices for petrol and airfares. Services inflation, which has been stubbornly high, dropped from 5.6% y/y to 4.9%, its lowest level since May 2022. Monthly, CPI was flat, below 0.3% in August and below the market estimate of 0.1%. Core CPI also decelerated in September and was lower than expected (3.2% y/y and 0.1% m/m). As well, wage growth slowed to 4.9% in the three months to August, down from 5.1% previously. The Bank of England will be encouraged by the drop in inflation and in wages. The UK economy is groaning under the weight of a cash rate of 5% and the markets are looking at a rate cut in November as a done deal, while a December cut is a strong possibility. Many major central banks have shifted their primary focus from inflation risks to the labor market, and we could see the same with the BoE, now that inflation is back below the BoE’s target. GBP/USD has pushed below support at 1.3071, 1.3039 and 1.3004. The next support level is 1.2972 1.3106 and 1.3138 are the next resistance lines
by OANDA