Forex News

External Bank of England (BoE) MPC Member Megan Greene spoke at the Goodbody Annual Equity Conference in Dublin on Thursday. She said that although inflation has stabilized, her big concern is around second-round effects.

Key takeaways

Inflation outturns are feeding into expectations.

CPI expectations at the top of the bands we can explain.

Business CPI expectations are rising and elevated.

My big concern is around second-round effects.

Inflation has stabilized.

I expect slack to increase. The BoE projection is benign.

Slack opened up in the labour market and economy.

Evidence on wage growth is encouraging.

It's encouraging that services inflation is coming down.

Policy must bear down if expectations are elevated.

Preliminary results from the BoE Agents’ Survey point to pay settlements of around 3.5%.

This may be due to an upward shift in wage-setting."

• Silver trades slightly lower as the US Dollar attempts to recover.
• Expectations of a December Fed rate cut continue to limit downside pressure on the metal.
• Geopolitical tensions and uncertainty around US data releases keep safe-haven demand supported.

Silver (XAG/USD) drifts slightly lower on Thursday, trading around $53.25, down 0.15% on the day at the time of writing. The white metal remains range-bound amid thin liquidity associated with the US Thanksgiving holiday. A modest rebound in the US Dollar (USD) is capping intraday gains and keeping Silver contained.

Despite this consolidation, the broader macro backdrop remains supportive for precious metals. Several Federal Reserve (Fed) officials have recently signaled openness to near-term easing, reinforcing market expectations that the central bank could deliver another 25-basis-point rate cut at its December meeting. This outlook continues to weigh structurally on the US Dollar, helping to limit any significant pullback in XAG/USD.

At the same time, improving sentiment in global Equity markets, driven by rising confidence in Fed easing, somewhat reduces demand for safe-haven assets. However, this effect is partially offset by persistent geopolitical risks. Tensions between China and Taiwan have resurfaced after Beijing issued new warnings to Japan, while investors are closely monitoring signals of progress on a US-backed framework for peace talks between Russia and Ukraine. These factors maintain a moderate level of caution, indirectly supporting Silver.

In the United States (US), the US Dollar Index (DXY) is stabilizing after recent declines, holding slightly above its weekly lows. Recent US economic releases, including mixed manufacturing data, signs of labor-market softening and weaker consumer momentum, reinforce expectations of a slowing economic backdrop.

Earlier reports this week already highlighted similar concerns, keeping the market focused on the Fed’s next steps. Meanwhile, US markets are closed on Thursday, and delayed data releases limit short-term visibility.

Overall, Silver remains close to its recent highs, supported by a macro environment that still favors precious metals. However, thin trading conditions may keep XAG/USD in consolidation until US participants return.

• USD/JPY holds firm as the Yen struggles to gain meaningful traction amid rising fiscal concerns.
• Technical setup stays bullish within an ascending channel, though momentum shows early signs of fatigue.
• RSI eases to around 62, retreating from overbought territory and hinting at consolidation.

The Japanese Yen trims part of its earlier recovery against the US Dollar on Thursday as the Greenback shows resilience in muted, holiday-thinned trading. At the time of writing, USD/JPY is hovering around 156.30, edging higher modestly after briefly touching a daily low of 155.73.

The Japanese Yen continues to struggle for any meaningful rebound as fiscal concerns remain front and centre following Japan’s approval of a large stimulus package. The sizeable spending programme unveiled by Prime Minister Sanae Takaichi has reignited worries about the country’s debt sustainability, reinforcing the view that fiscal risks remain tilted to the downside.

Adding to the cautious tone, uncertainty persists around the timing of the Bank of Japan’s (BoJ) next rate hike, with policymakers offering little clarity in recent weeks. Traders are now shifting focus to Friday’s Tokyo Consumer Price Index (CPI) for November, which could influence expectations for the December BoJ meeting.

In contrast, markets appear increasingly confident that the Federal Reserve (Fed) will deliver another interest rate cut next month. According to the CME FedWatch Tool, traders are pricing in around an 85% probability of a 25 basis point (bps) cut at the December 9-10 meeting.

From a technical perspective, the daily chart shows USD/JPY firmly entrenched in a strong uptrend, trading within a well-defined ascending channel characterized by a clear sequence of higher highs and higher lows. The pair remains comfortably above key moving averages, underscoring that buyers continue to dominate the broader structure.

However, momentum indicators are beginning to show early signs of exhaustion. The Moving Average Convergence Divergence (MACD) histogram has slipped slightly into negative territory just below the zero line, signalling waning bullish momentum.

At the same time, the Relative Strength Index (RSI), currently around 62, is easing from overbought territory, hinting at a potential pause or consolidation before the next directional move.

On the downside, immediate support sits near the 155.00 psychological level, which aligns with the 21-day Simple Moving Average (SMA) and the lower boundary of the ascending channel. A decisive break below this region would suggest a shift in near-term structure and open the door to further downside toward the 50-day SMA near 152.38.

On the upside, the 157.00-157.50 region could act as the next hurdle for buyers. A sustained break above this zone would reaffirm bullish momentum and pave the way toward this year’s high near 158.88.

• The Euro gains modest support after European Central Bank minutes show unanimous backing to keep rates unchanged.
• The Japanese Yen remains under pressure due to rising fiscal concerns in Japan and uncertainty surrounding the Bank of Japan’s next move.
• EUR/JPY trades around 181.25 on Thursday, virtually inchanged for the day.

EUR/JPY trades around 181.25 on Thursday at the time of writing, as the market digests a mild boost for the Euro (EUR) from the latest European Central Bank (ECB) Accounts alongside a still-challenging backdrop for the Japanese Yen (JPY).

The ECB Accounts revealed unanimous agreement within the Governing Council to leave all three key interest rates unchanged in October, with policymakers describing the current monetary stance as “in a good place”.

The minutes confirmed that inflation is gradually converging toward the 2% target, while domestic demand and labour-market conditions remain resilient. However, the discussion also highlighted “two-sided” risks to inflation. Some members believe the easing cycle has likely ended, while others do not rule out further rate cuts in 2026 should downside risks intensify.

On the data front, sentiment indicators published earlier in the day painted a mixed but stable picture. The Economic Sentiment Indicator came in at 97 in November, in line with expectations, while Consumer Confidence remained unchanged at -14.2.

In Japan, the Japanese Yen (JPY) remains structurally pressured as fiscal concerns deepen and speculation persists around the timing of the Bank of Japan’s (BoJ) next rate increase. Prime Minister Sanae Takaichi’s pro-stimulus stance has amplified worries over Japan’s public-debt trajectory, weighing further on the JPY despite a constructive risk-tone globally.

Markets also remain alert to the risk of intervention. Finance Minister Satsuki Katayama issued his strongest warning so far, saying the government would take “appropriate action” in case of excessive volatility. Takuji Aida, a member of an influential government panel, also raised the possibility of intervention to counter the economic fallout of an excessively weak currency.

On the monetary front, several recent signals reinforced the view that a December rate hike remains a live option. Reuters reported that the BoJ has intentionally adjusted its communication in recent days to emphasise the inflationary risks stemming from a persistently weak Japanese Yen.

The tone was echoed by BoJ board member Asahi Noguchi, who reiterated that if economic activity and prices evolve as forecast, the central bank will gradually adjust the degree of accommodation to reach the neutral interest rate once inflation is durably anchored at 2%.

Recent data supports this trajectory as well. Japan’s Services Producer Price Index rose 2.7% in October from a year earlier, underscoring that inflation is approaching a durable 2% pace. Meanwhile, the government’s approval of a massive ¥21.3 trillion stimulus plan, the largest since the COVID era, has intensified concerns about rising debt issuance and contributed to further yield-curve steepening, limiting the Japanese Yen’s ability to recover.

Against this backdrop, EUR/JPY remains caught between mild Euro support, driven by the ECB’s steady monetary posture, and a structurally fragile Japanese Yen, partly cushioned by intervention risks and expectations of BoJ tightening.

• GBP/USD remains steady as markets digest the Autumn Budget despite OBR’s downgraded UK growth outlook.
• Fed cut odds hold at 85%, keeping pressure on the US Dollar in thin holiday liquidity.
• US jobless claims remain resilient, though broader labor signals continue to soften gradually.

The GBP/USD pair remains steady at around 1.3230 on Thursday as market participants digest the UK’s Autumn Budget amid thin trading liquidity conditions, with US markets remaining closed in observance of the Thanksgiving holiday. At the time of writing, the pair is flat at 1.3232, virtually unchanged.

Sterling steady in thin Thanksgiving trade as Fed cut bets cap Dollar strength

European bourses trade with a positive mood after Wall Street ended Wednesday’s session in the green ahead of the long weekend. The UK Chancellor Rachel Reeves revealed the Autumn Budget.

Analysts cited by Reuters revealed that “Fears about slow growth, weak productivity and sticky inflation are not reflective of an attractive investment backdrop.” Reeves' budget was well received by markets despite the Office for Budget Responsibility (OBR) downward revision of the economic growth for 2025.

Although this is bearish for the Pound Sterling (GBP), the US Dollar (USD) remains pressured on expectations that the Federal Reserve (Fed) might reduce borrowing costs at the December 9-10 meeting.

Odds of a 25-basis-point rate cut by the Fed are 85%, unchanged from a day ago.

On Wednesday, US Initial Jobless Claims figures for the week ending November 22 rose by 216K, beneath forecasts of 225K, an indication that the labor market is solid despite signs of weakness.

Continuing claims for the week ending November 15 rose from 1.95 million to 1.96 million. In the meantime, the US Dollar Index (DXY), which tracks the buck’s performance versus six currencies, remains steady at 99.57.

GBP/USD Price Chart – Daily

• EUR/GBP holds near a one-month low as traders assess ECB minutes and Eurozone data
• ECB minutes show unanimous support for holding rates, describing the policy stance as “in a good place.”
• Traders await comments from BoE’s Megan Greene, with December rate-cut expectations firming in recent weeks.

The Euro (EUR) trades flat against the British Pound (GBP) on Thursday after a sharp slide on Wednesday following the United Kingdom’s Autumn Budget. At the time of writing, EUR/GBP is trading near 0.8761, holding close to a one-month low as sentiment continues to favour Sterling.

The Euro is finding some support from the latest European Central Bank (ECB) minutes, which showed unanimous backing for leaving all three key policy rates unchanged in October. The Governing Council described the policy stance as “in a good place” and highlighted the value of waiting for December’s updated projections before considering any further adjustments.

The minutes also reaffirmed that inflation is broadly moving toward the 2% target, while domestic demand and labour-market conditions remain reasonably resilient.

At the same time, policymakers noted that inflation risks remain two-sided, with members split on whether the cutting cycle has effectively ended or if additional easing might be required in 2026 should downside risks intensify.

The minutes further highlighted that markets have “almost fully priced out” any additional rate cut in 2025, while the OIS curve assigns only around a 40% probability of one more reduction by the end of 2026.

On the data front, Eurozone sentiment figures released earlier in the day painted a mixed but steady picture. The Economic Sentiment Indicator for November came in at 97, matching the market forecast of 97 and slightly above October’s 96.8. The Business Climate Index slipped to 0.66 from -0.47. Consumer Confidence was unchanged at -14.2, matching both forecasts and the October reading.

Meanwhile, the UK’s new Autumn Budget under Chancellor Rachel Reeves highlighted an increase in fiscal headroom that exceeded expectations. According to the Office for Budget Responsibility’s (OBR) latest economic and fiscal outlook, the government is projected to run a current budget surplus margin of £21.7 billion in 2029-30, compared with £9.9 billion in the March forecast.

Looking ahead, traders will shift their attention to comments from Bank of England (BoE) policymaker Megan Greene, who is scheduled to speak later on Thursday. Her remarks will be assessed for any guidance on the policy path, as markets have grown more confident in recent weeks that the BoE could move toward a rate cut in December.

The Economist described it as a ‘bodge-it budget’ that doesn’t give Britain what it needs. The FT calls it a ‘Spend now, pay later’ budget, which merely delays fiscal pain. The Guardian calls it a ‘live now, pay later’ budget and wonders what happens when ‘later’ arrives. As is the way, the major policy announcements were known in advance, and the fact that they don’t kick in straight away helped soften the blow and allowed the pound and longer-dated gilts to rally. So far, so good but this budget made almost no reference to economic growth at all, Société Générale's FX analyst Kit Juckes notes.

GBP overvaluation raises parity risks

"There are (at least) three factors that will determine how the Budget affects the pound’s value in the year ahead. The first is the growth outlook and on that score, the UK is as European as ever and as un-American as usual. Consensus 2026 GDP forecasts are at 1.1% for the UK and Eurozone, and 1.9% for the US. SG’s average forecasts for 2025-2029 are 1.2% in the UK and Eurozone and 2% in the US, which amounts to much the same thing. The growth story suggests EUR/GBP will be range-bound but both EUR and GBP will fall against the USD in 2026."

"The second factor is the outlook for monetary policy and interest rates. Our economists expect 50bp of Fed cuts next year, but the market prices in 90bp. We expect the ECB to cut once, by 25bp in QA1, and then reverse that later in the year, where the market prices 40bp of cuts. And in the UK, we expect rates to be 1% lower by the end of 2026, whereas market pricing looks for a 60bp fall. The UK has more room to cut rates than others and is likely to use it, which won’t help the pound in 2026. We think this leaves GBP vulnerable to a modest climb towards 0.9 in the months ahead, while pointing clearly to both EUR/USD and GBP/USD drifting lower."

"Finally, the GBP is getting painfully overvalued relative to purchasing power parity (PPP). In general, PPP means very little (The OECD measure of PPP is 1.50 for EUR/USD, 95 for USD/JPY and 1.47 for GBP/USD). But within Europe, where bilateral trade is a bigger share of overall GDP, the gradual rise in PPP fair value for EUR/GBP, from just under 0.90 in 2000 to over parity now, is a problem. The gap was slightly bigger than this in the early 2000s and in the wake of the EUR collapse in 2015 but in both cases, what followed was a significant correction as GBP fell against both EUR and USD. In those instances, the drivers of GBP weakness were the Great Financial Crisis and the Brexit vote, but the UK is only one political calamity away from seeing EUR/GBP trade above parity."

• Gold steadies near two-week highs as a firmer US Dollar caps intraday gains.
• Traders maintain a strong conviction in a December Fed rate cut, keeping dips in XAU/USD limited.
• Technically, XAU/USD is testing the upper edge of a symmetrical triangle, with $4,200 as the next upside target.

Gold (XAU/USD) is treading water on Thursday as a modest rebound in the US Dollar (USD) weighs on the precious metal. At the time of writing, XAU/USD is trading around $4,155, hovering near two-week highs reached on Wednesday, with prices up over 2% so far this week.

The broader narrative remains supportive for Bullion as several key Federal Reserve (Fed) officials have recently signalled openness to near-term easing, reinforcing market expectations that the central bank could deliver another rate cut at the December 9-10 meeting.

Expectations of another Fed rate cut have also helped global equities recover from the recent AI-valuation-led pullback, improving overall risk appetite. The resulting risk-on tone is acting as a headwind for Gold, and with US markets closed on Thursday in observance of Thanksgiving, liquidity is expected to remain thin, leaving the metal largely range-bound.

Market movers: Dollar finds support while Fed rate cut expectations remain intact

• The US Dollar Index (DXY), which measures the Greenback's value against a basket of six major currencies, is trading around 99.60, recovering modestly after slipping to an over one-week low near 99.41 earlier in the day.
• The delayed US economic data released so far painted a mixed picture with stronger-than-expected September Nonfarm Payroll (NFP), softer core Producer Price Index (PPI) and upbeat Durable Goods Orders contrasting with softer Retail Sales and an uptick in the Unemployment Rate.
• Even with the mixed economic signals, traders remain convinced the Fed will ease in December, with markets pricing in around an 85% probability of a 25-basis-point reduction, according to the CME FedWatch Tool.
• Geopolitical tensions remain in focus with the ongoing China-Taiwan dispute after Beijing issued fresh warnings to Japan, responding to Tokyo’s suggestion that it could help defend Taiwan if China attacks. Investors are also monitoring developments around the Russia-Ukraine peace talks, after President Volodymyr Zelenskiy signalled readiness to advance a US-backed framework to end the war. Against this backdrop, safe-haven demand remains broadly supportive for Gold.

Technical analysis: XAU/USD tests triangle resistance with $4,200 in focus

On the daily chart, Gold maintains a constructive structure, with the 21-day Simple Moving Average (SMA) continuing to hold above the 100-day SMA, keeping the broader bias tilted in favour of buyers.

Price remains comfortably above both moving averages, while the Relative Strength Index (RSI) at 59.59 holds well above the mid-50 region, reinforcing positive momentum. The Average Directional Index (ADX) at 19.12 still points to subdued trend strength.

XAU/USD is currently pressing against the upper boundary of a symmetrical triangle formation, with the next key resistance located near $4,200. A decisive break above this barrier would open the door to further upside. However, failure to clear $4,200 may see Gold extend its consolidation within the triangle pattern.

On the downside, $4,150 acts as initial support, followed by stronger support around $4,050-$4,070, where the rising 21-day SMA converges with the lower boundary of the triangle.

• GBP/JPY holds firm after touching a fresh year-to-date high on Wednesday.
• Technical setup stays constructive above key moving averages, with the 205.00 psychological level acting as immediate support.
• MACD and RSI signals favour buyers, with momentum holding strong and no signs of exhaustion.

GBP/JPY holds steady near 207.00 on Thursday after touching a fresh year-to-date high on the previous day, with sentiment leaning in favour of the British Pound (GBP) following the United Kingdom’s Autumn Budget.

Meanwhile, the Japanese Yen (JPY) remains under sustained pressure across the board as traders focus on rising fiscal concerns in Japan and uncertainty over the timing of the Bank of Japan’s next rate hike, keeping the broader backdrop supportive for Sterling against the Yen.

From a technical perspective, the pair trades comfortably above its short, medium and long-term moving averages. The 205.00 psychological level, which sits close to this week’s low, acts as an initial floor, followed by the 21-day Simple Moving Average (SMA) at 203.70, which provides the first layer of dynamic support.

Momentum indicators remain aligned with buyers. The Moving Average Convergence Divergence (MACD) indicator shows the MACD line holding above the Signal line, while the histogram continues to widen in positive territory, which points to strengthening bullish momentum rather than exhaustion. The Relative Strength Index (RSI) trades near 66, upbeat yet still below the overbought region.

Near-term, the upside bias remains intact as long as GBP/JPY holds above the rising 21-day SMA. A shallow pullback would likely find support at 203.70, followed by the 50-day SMA at 202.43, while the 100-day SMA near 200.66 serves as a deeper cushion.

A break above Wednesday’s peak would open the door toward the 207.50-208.00 zone. A drop in the RSI toward 50 or a loss of momentum on the MACD would indicate consolidation rather than a trend reversal. The overall technical backdrop continues to support buying on dips.