GBP: Underperformance starting to become clearer – Commerzbank

FXStreet Insights Team FXStreet

Investors seem to be taking a dimmer view of sterling, presumably on the back of the fiscal straitjacket currently trapping UK Chancellor Rachel Reeves, ING’s FX analyst Chris Turner notes.

EUR/GBP to challenge April's spike high at 0.8735

"This week, however, the story could be more macro and particularly focus on the labour market. This morning, we have already seen quite a poor labour market survey from KPMG and Thursday this week sees labour market data for June. In May, payrolled employees fell by quite a large 109k. Most expect this number to be revised up."

"If not, perhaps the UK labour market is in a weaker position after all, and the Bank of England will have to cut rates more quickly. Tomorrow, we will also see June CPI data, where services inflation is set to edge lower again – also supportive for slightly quicker BoE rate cuts. Currently, the market prices two 25bp rate cuts this year."

"EUR/GBP has held support at 0.8600. This week's data could see EUR/GBP break through 0.8670 resistance in a move to challenge April's spike high at 0.8735."

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 climbs toward 0.7000 after strong China data dump

AUD/USD attracts follow-through buyers for the second straight day on Monday, extending last week's recovery toward 0.7000 in Monday's Asian trading. Strong Chniese Q3 GDP and activity data for September strengthen the pair's advance, following RBA Assistant Governor Chris Kent's hawkish remarks.

USD/JPY struggles near 158.00 amid hawkish BoJ, subdued USD

USD/JPY remains defensive near 158.00 in the Asian session on Monday, as the US Dollar remains depressed near a two-week low amid the recent decline in US bond yields. Furthermore, looming intervention risks underpin the Japanese Yen and weigh on the pair amid BoJ Governor Kazuo Ueda's hawkish remarks. However, Fed rate-hike bets and geopolitical uncertainties could limit USD losses and the major.

Gold drops to daily lows below $4,150

Gold builds on Friday’s retracement and slips back below the $4,150 mark per troy ounce on Monday. The better tone in the US Dollar and a decent bounce in US Treasury yields across the curve keep the yellow metal under pressure for now.

Crypto Today: Bitcoin, Ethereum, XRP extend recovery despite ETFs outflows

Bitcoin edges higher above $82,000, building strong structural support despite roughly $229 million in ETF outflows last week. Ethereum recovers above $2,400 as bulls strive to regain trend control, backed by a subtle recovery in momentum indicators.

Higher than expected inflation shakes markets: What to prepare for?

US CPI report came in stronger than expected, lifting the probability of a December rate hike higher once again. Even though Fed Chair Warsh reinforced expectations of a hold for the October’s meeting, markets now face a two-step event: a likely pause on October 28, followed by an interest rate hike on December 9.

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.