GBP up marginally vs. USD – Scotiabank

FXStreet Insights Team FXStreet

The Pound Sterling (GBP) is up a marginal 0.1% against the US Dollar (USD) and mid-performer among the G10 as we head into Thursday’s NA open, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

UK bond market in focus

"The UK bond market is once again in focus, as the latest 10Y gilt auction generated the lowest oversubscription rate since December 2023. The UK’s fiscal outlook remains a core risk for the GBP into the November 26 budget release."

"The BoE’s Decision Maker Panel (DMP) inflation expectations were mixed, with the 1Y measure surprising slightly to the upside (3.5% vs. 3.4% exp. & prev.) while the 3M measure came in as expected at 3.7%. UK-US yield spreads are offering fundamental support following Wednesday’s ADP-fueled surge, and threatening fresh 15 month highs."

"The GBP’s technical picture is also largely neutral with an RSI hovering just below the dividing threshold at 50. We are reassured by the GBP’s push back above its 50 day MA (1.3463) and see scope for a sustained push back above 1.35. We see limited meaningful resistance ahead of the mid-1.36 area and look to a near-term range bound between 1.3450 support and 1.3550 resistance."

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 sticks to neutral bias above 0.7100 amid cautious markets

AUD/USD holds steady above 0.7100 in the Asian session on Monday as the US Dollar stalls its modest pullback from the highest level since late July amid persistent geopolitical uncertainties. The PBOC status quo on Loan Prime Rates also weighs on the Aussie. However, bets on another RBA rate hike continue to underpin the Australian Dollar ahead of the Trump-Xi Summit.

USD/JPY eases below 157.00 amid looming intervention risks

USD/JPY is easing back below 157.00 in Asia on Monday, undermined by modest Japanese Yen strength amid looming intervention risks after Friday's BoJ rate check. A Japanese holiday also keeps traders on edge amid escalating geopolitical tensions between Russia and Ukraine and in the Middle East. As a result, the US Dollar pauses its pullback, limiting the pair's downside.

Gold remains depressed around $4,350 amid rate jitters, modest USD strength

Gold maintains its offered tone through the first half of the European session, and currently trades around $4,350, down over 0.50% for the day. The commodity, however, holds comfortably above a six-week low, touched last Wednesday as traders await further developments around the Middle East crisis and their implications for inflation. This, in turn, would influence interest rate expectations and, in turn, drive the non-yielding bullion.

Bitcoin hits $85,000 for the first time in eight months

Bitcoin price reclaims $85,000 on Monday, advancing last week’s 5% recovery toward an eight-month high. The recovery in King Crypto aligns with renewed institutional demand, with Exchange Traded Funds (ETFs) recording $433 million in inflows on Friday.

The week ahead: Fuel prices in focus as we lead up to key eco releases

Financial markets are in a strange position as we move to the final weeks of Q3, uncertainty and volatility continue to grip markets, but the oil price is falling; and European and US stocks are poised to open higher later on Monday. Market stresses are concentrated in sovereign bonds, and European and US yields had another scare late on Friday, and moved higher.

BoJ Recap: Not as hawkish as expected

The Bank of Japan (BoJ) raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks.