Forex News
- British Pound gives back early gains and drops to near 1.3430 against the US Dollar.
- Fed’s Waller warns of bigger interest rate hike in December if US core CPI sustains or rises further.
- BoE’s Lombardelli says that she won’t rule out an interest rate hike in December.
The British Pound (GBP) gives back its early gains and turns negative at around 1.3430 against the US Dollar (USD) during the European trading session on Tuesday. The GBP/USD pair drops as the US Dollar recovers quickly, following hawkish remarks from Federal Reserve (Fed) Governor Christopher Waller.
At press time, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, turns almost flat at around 101.65 after clawing back early losses.
During the European session, Fed’s Waller said that further interest rate hikes are needed as inflationary pressures are high and labor market conditions are solid. Waller has also warned ahead of the United States (US) Consumer Price Index (CPI) data for October, which will be published at 13:30 GMT, that a “half-point Fed rate hike may be needed in December, if October core CPI inflation comes in around 0.3% or higher.”
Waller flags risk of larger december hike as inflation worries intensify
Fed’s Waller delivered a distinctly more hawkish tone, with an FXS Speechtracker score of 8.6/10 versus a historical average of 7.2/10, underscoring heightened concern about persistent inflation. The explicit openness to a half-point FED rate hike in December if core CPI prints around 0.3% or higher, alongside support for at least a quarter-point move even on better data, signals a strong bias toward further tightening and a low tolerance for upside inflation surprises. Emphasis on the breadth of price increases, looming producer price pressures, and potentially more persistent energy shocks, despite a solid labor market and still-solid GDP growth, reinforces a narrative of inflation risks dominating the policy reaction function.
The FXS Fed Sentiment Index rose by 1.58 points to 143.91, keeping the gauge deeply in hawkish territory and confirming that this speech marks a meaningful hawkish shift relative to the established baseline. The combination of a higher FXS Fed Sentiment Index level and an above-average FXS Speechtracker score suggests markets should price a higher probability of additional FED tightening, with upside risk to the Dollar as rate expectations are recalibrated.
MUFG/BTMU point out that "October headline and core CPI are expected to slow to 0.3%mom and 0.2%mom, respectively." They caution that "a downside inflation surprise would challenge rate hike expectations and could weigh on the dollar," potentially tempering the recent build-up in Fed tightening bets.
The US Dollar has broadly remained under pressure in the past few weeks, as lower oil prices due to increased hopes of US-Iran deal anchored global inflation expectations.
On the British Pound front, Bank of England (BoE) Deputy Governor Clare Lombardelli has kept the hopes of more interest rate hikes alive. “Wouldn’t rule out rate hike possibility in December,” BoE’s Lombardelli said in an interview with Guardian.
GBP/USD Technical Analysis
In the daily chart, GBP/USD trades at 1.3433. The pair holds a mild bullish bias as it stays above the 20-day Exponential Moving Average (EMA) at roughly 1.3378 and has reclaimed the 50.0% Fibonacci retracement of the latest downswing at around 1.3407. The Relative Strength Index (14) near 56 suggests firm but not overextended upside momentum, hinting that buyers retain control while price action holds above these underlying supports.
On the topside, immediate resistance emerges at the 61.8% Fibonacci retracement near 1.3470, with the 78.6% retracement around 1.3560 forming a higher barrier if bulls extend the advance. On the downside, initial support is seen at the 50.0% retracement at 1.3407, followed by the 20-day EMA near 1.3378; a deeper pullback would expose the 38.2% level around 1.3343 and then the 23.6% retracement at 1.3265, ahead of the structural floor near 1.3138.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Lombardelli flags low-gear economy and keeps December hike in play
Lombardelli’s 6/10 FXS Speechtracker score sits notably below the 7.2/10 historic average, pointing to a slightly less confident tone as the focus shifts to a “low-gear economy” and a cooling labour market. The observation of a “real fall-off in hiring” but limited redundancies underscores a softening demand backdrop without acute stress, which tempers immediate urgency for aggressive tightening.
However, explicitly “not ruling out” a December rate hike keeps a mild hawkish bias alive, as policy optionality is clearly preserved despite data uncertainty. For GBP, this mix of weaker growth signals and an open door to further tightening suggests a nuanced stance: short-term upside may be capped by growth concerns, but downside is cushioned by the ongoing possibility of another hike.
Silver prices (XAG/USD) fell on Tuesday, according to FXStreet data. Silver trades at $52.51 per troy ounce, down 1.58% from the $53.35 it cost on Monday.
Silver prices have decreased by 26.13% since the beginning of the year.
Unit measure | Silver Price Today in USD |
|---|---|
Troy Ounce | 52.51 |
1 Gram | 1.69 |
The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, stood at 77.92 on Tuesday, up from 77.63 on Monday.
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
(An automation tool was used in creating this post.)
- The US Consumer Price Index is expected to rise by 0.3% MoM in October.
- Monthly core CPI inflation is expected to soften to 0.2% from 0.3% in September.
- The inflation report, combined with geopolitical headlines and the stock market action, could influence the US Dollar valuation in the near term.
The US Bureau of Labor Statistics (BLS) will publish the October Consumer Price Index (CPI) data on Tuesday, a release that could influence the US Dollar (USD) valuation as investors reassess the Federal Reserve’s (Fed) interest-rate outlook.
The report won’t include 12-month percentage changes for most CPI series in this release, due to missing October 2025 monthly data because of the lack of collection during the government shutdown from October 1, 2025, to November 12, 2025.
“For most CPI series, BLS could not publish October 2025 indexes. As a result, BLS will not publish 12-month percent changes for October 2026 for indexes where October 2025 data are not available,” the BLS noted in a press release.
On a monthly basis, headline CPI is forecast to rise 0.3% following the 0.6% increase recorded in September, while the core CPI is seen increasing 0.2%, compared to 0.3% in the previous month.
Economists at Deutsche Bank see a clear moderation in the upcoming US inflation data. They note that “headline CPI [is] to rise by 0.20% month-on-month, down from 0.65% previously, with core CPI also up 0.20% after 0.33% last time.” Despite the anticipated softer prints, the bank’s team “continue[s] to expect 25bp rate increases at the December and March FOMC meetings, absent a further material tightening in financial conditions.”
Economic Indicator
Consumer Price Index (MoM)
Inflationary or deflationary tendencies are measured by periodically summing the prices of a basket of representative goods and services and presenting the data as The Consumer Price Index (CPI). CPI data is compiled on a monthly basis and released by the US Department of Labor Statistics. The MoM figure compares the prices of goods in the reference month to the previous month.The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.
Read more.Next release: Tue Nov 10, 2026 13:30
Frequency: Monthly
Consensus: 0.3%
Previous: 0.6%
Source: US Bureau of Labor Statistics
The US Federal Reserve (Fed) has a dual mandate of maintaining price stability and maximum employment. According to such mandate, inflation should be at around 2% YoY and has become the weakest pillar of the central bank’s directive ever since the world suffered a pandemic, which extends to these days. Price pressures keep rising amid supply-chain issues and bottlenecks, with the Consumer Price Index (CPI) hanging at multi-decade highs. The Fed has already taken measures to tame inflation and is expected to maintain an aggressive stance in the foreseeable future.
How could the US Consumer Price Index report affect EUR/USD?
According to the CME FedWatch Tool, markets currently see about an 80% chance of the Federal Reserve (Fed) raising the policy rate by another 25 basis points (bps) at the last meeting of the year.
Speaking at a news conference after the Fed's decision to leave interest rates unchanged at a range of 3.75%-4.00% in October, Fed Chair Kevin Warsh described labor market conditions as “positive,” and added that the discussion among policymakers is focused mainly on the price stability mandate. The October employment report confirmed a robust labor market, with Nonfarm Payrolls (NFP) rising by 165K and the Unemployment Rate declining to 4.1% despite an uptick in the Labor Force Participation Rate.
In the meantime, crude Oil prices declined sharply last week as markets grew optimistic about a diplomatic resolution to the conflict in the Middle East following the Republicans’ defeat in the midterm elections. Although this recent fall won’t be reflected in October inflation figures, a notable downward surprise in the monthly CPI, with a print of 0.1% or lower, combined with an extended slide in energy prices could cause market participants to refrain from pricing in a rate hike in December. In this scenario, the US Dollar (USD) could come under sudden selling pressure and help EUR/USD gather bullish momentum in the near term.
Conversely, a reading at or above market expectations, coupled with a lack of progress in ceasefire negotiations with Iran, could reinforce an increase in interest rates next month. However, the market positioning suggests that the USD’s upside potential could remain limited in this scenario, paving the way for a short-lasting bearish reaction in EUR/USD.
At the same time, the action in stock markets could further influence the USD’s valuation and impact EUR/USD’s performance. An extended selloff in technology stocks could support the USD and cap EUR/USD gains even if inflation data arrive soft and reinforce a cautious Fed policy-tightening path.
Strategists at ING argue that the recent US Dollar strength is heavily contingent on risk sentiment, noting that “we think the dollar rally requires the risk-off mood to persist this week.” They caution that “Friday’s move looked a bit too stretched relative to short-term market drivers,” leaving “some moderate correction risk” if market nerves ease. Even so, ING believes the broader backdrop remains Dollar-supportive, with the “macro story”
“We expect tomorrow’s October US CPI to come in at 0.3% month-on-month for both headline (consensus 0.3%) and core (0.3%),” they add and note that such an outcome “should help cement expectations for a December Fed hike (19bp priced in), making the swap curve more protected from other equity market shocks.”
Eren Sengezer, European Session Lead Analyst, shares a brief technical outlook for EUR/USD:
“The EUR/USD pair has been moving in a relatively narrow channel since the beginning of October. During last week’s post-midterm elections rally, the Relative Strength Index (RSI) indicator on the daily chart recovered toward 50 but failed to clear this level, highlighting buyers’ hesitancy.”
“On the upside, 1.1260 (upper arm of the Bollinger Bands, static level) aligns as the first resistance level ahead of 1.1335 (50-day Simple Moving Average (SMA), static level) and 1.1410 (100-day SMA). Looking south, the first support level could be spotted at 1.1130 (lower arm of the Bollinger Bands, static level). If this support fails and gets confirmed as resistance, technical sellers could take action and open the door for an extended drop toward 1.1000 (static level, round level).”
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
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