BoE's hesitant stance to pummel the Pound – Commerzbank

FXStreet Insights Team FXStreet

The BoE's stance seems too hesitant, which is likely to weigh on the Pound in the coming quarters, economists at Commerzbank report.

GBP weakness will probably continue next year as well

The door remains open for further rate hikes, but the BoE is likely to hope that the upcoming data releases will give it room to pause. The financial markets apparently do not share the BoE's optimistic view. The terminal rate is now seen at 5.5%. This seems excessive in view of the BoE's hesitant stance.

The market will probably have to scale back its interest rate expectations, which is why we are sticking to our forecast that the Pound will weaken against the EUR in the coming months. After all, in contrast to the BoE, the ECB appears much more determined in its statements, which should support the EUR.

GBP weakness will probably continue next year as well, as the BoE is likely to cut its key rate in view of the weak economy and somewhat lower inflation.

Source: Commerzbank Research

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

AUD/USD recovers toward 0.7000 amid improving mood

AUD/USD is firming up toward 0.7000 in Asia on Tuesday, helped by improving market mood. A pause in the US Dollar rebound also aids the pair's upside. However, geopolitical risks and caution ahead of AI tech earnings report could limit the pair.

USD/JPY flatlines near 158.50 as markets seek direction

USD/JPY steadies around 158.50 in the Asian trading hours on Tuesday. Traders prefer to wait on the sidelines ahead of Japan’s National Consumer Price Index inflation data later on Friday. Meanwhile, elevated US bond yields provide some support to the US Dollar against the Japanese Yen.

Gold sellers remain in control while below 21-day SMA

Gold is falling for the third straight day on Tuesday, having run into sellers on several occasions at the $4,200 level. The bullion awaits a clear trading impetus amid uncertainty about the US Federal Reserve’s interest rate outlook and looming geopolitical risks.

Ripple and Cardano face downside risk as Solana consolidates

Top altcoins, including Ripple (XRP), Cardano (ADA), and Solana (SOL), stall on Tuesday after a bearish week, suggesting a brief pause in selling pressure. The technical outlook for XRP and ADA indicates a downside bias, while SOL shows mixed signals, with the price holding above $100 as momentum eases. Ripple trades at $1.2974 at press time on Tuesday, keeping a bearish near-term tone.

Markets now see no hike in October, but inflation is still a major concern

US inflation has returned to the spotlight after the latest Consumer Price Index (CPI) and Producer Price Index (PPI) reports showed a significant acceleration in price pressures. The data raised concerns that the Federal Reserve may need to maintain restrictive monetary policy for longer, pushing interest-rate expectations higher and putting pressure on stocks and gold.

The US Dollar fell. Gold didn't rally. That tells you everything

Gold (XAU/USD) is struggling to capitalize on a weaker US Dollar (USD), after repeatedly failing to establish itself above the $4,200 level. The precious metal remains confined to a relatively narrow trading range despite a combination of developments that would normally support higher prices.