Forex News
- The Pound Sterling outperforms its major peers ahead of the UK monthly GDP data on Thursday.
- BoE’s Taylor expects monetary policy to normalise at neutral levels soon.
- The US Dollar gains ground as US inflation remained steady in December.
The Pound Sterling (GBP) gains against its major peers, except antipodeans, on Wednesday. The British currency trades higher ahead of the United Kingdom (UK) monthly Gross Domestic Product (GDP) and factory data, which will be released on Thursday.
The UK Office for National Statistics (ONS) is expected to show that the economy expanded 0.1% in November. Meanwhile, month-on-month (MoM) Manufacturing Production is estimated to have grown steadily by 0.5%, with Industrial Production remaining broadly flat.
Investors will pay close attention to the UK GDP growth data to get cues on the current state of the economy. The UK GDP declined by 0.1% in both September and October after remaining flat in August.
The data will also drive market expectations for the Bank of England’s (BoE) monetary policy outlook. In the December policy meeting, the BoE guided that monetary policy will remain on a gradual downward path.
During European trading hours, BoE policymaker Alan Taylor said in a summit in Singapore that he expects interest rates to fall to their neutral levels soon, citing that price pressures could return to target by mid of 2026.
Daily digest market movers: Global central bank chiefs back Fed’s Powell
- The Pound Sterling trades 0.2% higher to near 1.3445 against the US Dollar (USD) during the European trading session on Wednesday. The GBP/USD pair rises amid Sterling’s outperformance, while the US Dollar ticks lower.
- As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, edges down to near 99.10, but is still close to its monthly high near 99.26.
- The US Dollar gained sharply on Tuesday after the release of the US Consumer Price Index (CPI) data for December. The CPI report showed that both headline and core inflation remained steady at 2.7% and 2.6% year-on-year (YoY), respectively, firming expectations that the Federal Reserve (Fed) will not cut interest rates in its policy meeting later this month.
- However, US President Donald continued to increase the pressure on Fed Chair Jerome Powell to cut interest rates further, while praising steady inflation figures. “We have very low inflation. That would give ’too late Powell’ the chance to give us a nice beautiful big rate cut," Trump said, according to a Reuters report.
- For more cues on inflation, investors will focus on the United States (US) Producer Price Index (PPI) data for October and November, which will be published at 13:30 GMT.
- Meanwhile, chiefs of global central banks have shown support towards Fed Chair Jerome Powell over his criminal charges, which he called a “pretext” for refraining from follow the president’s preferences. Chiefs from the European Central Bank (ECB), the BoE, and nine other central banks said collectively that “independence of central banks is a cornerstone of price, financial and economic stability in the interest of the citizens that we serve”, and “we stand in full solidarity with the Fed System and its Chair Jerome H. Powell”.
Technical Analysis: GBP/USD wobbles near 20-day EMA
GBP/USD trades at 1.3437 as of writing. The 20-day Exponential Moving Average has stalled around 1.3439, with price testing this dynamic cap. A close above the average would improve near-term traction. The RSI at 52 (neutral) edges higher, but still reflects balanced momentum.
Measured from the 1.3780 high to the 1.3006 low, the 50% Fibonacci retracement at 1.3393 acts as resistance on rebounds, while the 61.8% retracement at 1.3485 caps the upside. A close above the latter would signal the bearish trend is fading and could extend the recovery, while failure there would keep the pair range-bound.
(The technical analysis of this story was written with the help of an AI tool.)
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
- WTI slips as Venezuela begins reversing Oil production cuts imposed during the US embargo.
- Two supertankers departed Venezuela carrying about 1.8 million barrels each, likely the first shipments under a US supply deal.
- API reported US crude Oil inventories rose by 5.27 million barrels in the week ended January 9.
West Texas Intermediate (WTI) Oil price halts its four-day winning streak, trading around $60.40 per barrel during the European hours on Wednesday. Crude Oil prices lost ground as Venezuela resumed exports.
Venezuela has started scaling back oil production cuts introduced during the US embargo. Crude exports are also resuming, signaling a gradual return of supply to global markets. Two supertankers left Venezuelan waters on Monday carrying roughly 1.8 million barrels of crude each, potentially marking the first deliveries under a 50-million-barrel supply agreement with the United States, sources cited by Reuters.
The American Petroleum Institute (API) reported Tuesday that Weekly Crude Oil Stock rose by 5.27 million barrels in the week ended January 9. The US Energy Information Administration (EIA) will release Crude Oil Stocks Change later on Wednesday. A Reuters poll on Tuesday showed US crude oil stockpiles likely fell last week, while gasoline and distillate inventories were expected to rise.
However, Oil prices held near a three-month high, supported by growing supply risks linked to escalating protests in Iran. The US-based HRANA rights group reported the protest death toll at 2,571. US President Donald Trump has canceled talks with Iranian officials and urged demonstrators to continue, raising fears that potential US involvement could threaten Iran’s roughly 3.3 million bpd Oil output.
Indian Oil Corporation has purchased its first cargo of Ecuador’s Oriente crude for end-March delivery as India’s largest refiner broadens its sourcing to partially replace Russian Oil. US and EU sanctions on Russian producers and vessels have disrupted supplies, pushing Indian refiners to seek alternative sources, per Reuters.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
- The United States Census Bureau will release Retail Sales data for November.
- US Retail Sales are expected to have increased by 0.4% in the month.
- The US Dollar is weak ahead of the announcement, affected by geopolitical turmoil.
The United States (US) Census Bureau will publish November Retail Sales on Wednesday. The delayed data is expected to show that sales rose a modest 0.4% in the month, following no change in October. The report was delayed by the government shutdown, which diminishes its potential impact on the US Dollar (USD). The Retail Sales report is a key indicator of consumer spending and consumer demand, which are major drivers of the US economy.
Retail Sales Control Group, a smoother reading that excludes automobiles, gasoline, building materials, and food services, surged 0.8% in October after an unrevised 0.1% dip in September. The figure is relevant as it corresponds most closely with the consumer spending component of Gross Domestic Product (GDP).
The US economy kick-started the last quarter of 2025 on a strong footing, yet with mounting inflationary pressure that took its toll on consumption, particularly affecting lower and middle-income households.
Market participants do not seem worried about the latest economic developments, as real GDP increased at an annual rate of 4.3% in the three months to September, reflecting “increases in consumer spending, exports, and government spending that were partly offset by a decrease in investment,” according to the Bureau of Economic Analysis (BEA) official report.
But what will happen with the last quarter of 2025? Not only did the government shut down, dragging consumption lower, but also inflation remained stubbornly high. In the meantime, the Federal Reserve (Fed) delivered modest interest rate cuts and had to deal with US President Donald Trump's anger over the matter.
What to expect from the November US Retail Sales report?
As previously noted, sales are likely to show a modest 0.4% increase, while market players will be paying close attention to the core reading outcome after the 0.8% advance posted in the previous month.
In the meantime, the US published the December Consumer Price Index (CPI) data. The annual inflation rate was reported at 2.7% by the CPI, while the monthly reading was 0.3%, matching expectations. The core annual CPI increased by 2.6% while the monthly advance was 0.2%, slightly below expectations but matching November’s readings. The USD came under modest selling pressure with the news, but given that the data was pretty much in line with expectations, the FX board showed no relevant reaction.
With that in mind, deviations between the actual Retail Sales figure and expectations will be critical for the USD direction. A much weaker than anticipated report could put pressure on the Greenback, while much stronger-than-expected data should boost the American currency.
Still, the reaction is likely to be limited to the near term, as investors maintain their eyes elsewhere: US President Trump has been quite busy at the start of 2026, generating geopolitical noise. Not only did Trump conduct a military operation in Venezuela and capture former President Nicolás Maduro and his wife, but he also escalated threats to annex Greenland, a Danish territory rich in rare earth elements. But it did not end there: early on Tuesday, Trump announced a 25% new tariff on those countries doing business with the Islamic Republic of Iran.
When will US Retail Sales data be released, and how can it affect EUR/USD?
The US December Retail Sales data is due at 13:30 GMT, and as previously stated, the market reaction will be directly linked to the degree of deviation from expectations on the headline and the result of the Retail Sales Control Group reading.
Ahead of the announcement, the EUR/USD pair is trapped between 1.1600 and 1.1700, with the risk skewed to the downside yet without any directional momentum.
Valeria Bednarik, FXStreet Chief Analyst, notes: “The EUR/USD pair consolidates around 1.1650 and is technically neutral. The bearish case could become stronger if the pair falls through 1.1590, a strong static support level. Bulls, on the contrary, will likely prefer to jump in once the 1.1740 resistance area is cleared. In between, choppy trading is likely to persist by the hands of sentiment.
Economic Indicator
Retail Sales (YoY)
The Retail Sales data, released by the US Census Bureau on a monthly basis, measures the value in total receipts of retail and food stores in the United States. Retail Sales measure the change in the total value of goods sold at the retail level during a year. Retail Sales data is widely followed as an indicator of consumer spending, which is a major driver of the US economy. A result higher than expected is typically viewed as positive or bullish for the USD, whereas a lower than expected result is considered negative or bearish for the USD.
Read more.Next release: Wed Jan 14, 2026 13:30
Frequency: Monthly
Consensus: -
Previous: 3.5%
Source: US Census Bureau
Retail Sales data published by the US Census Bureau is a leading indicator that gives important information about consumer spending, which has a significant impact on the GDP. Although strong sales figures are likely to boost the USD, external factors, such as weather conditions, could distort the data and paint a misleading picture. In addition to the headline data, changes in the Retail Sales Control Group could trigger a market reaction as it is used to prepare the estimates of Personal Consumption Expenditures for most goods.
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
- The Indian Rupee rises against the US Dollar as hopes of a US-India trade deal have improved.
- India’s External Affairs Minister Jaishankar said that trade talks with US Secretary of State Rubio were good.
- India's Wholesale CPI grew strongly by 0.83% in December.
The Indian Rupee (INR) trades higher against the US Dollar in the opening session on Wednesday. The USD/INR pair drops to near 90.30 as the Indian Rupee gains on the outcome of trade talks between the United States (US) and India on Tuesday.
India’s External Affairs Minister Subrahmanyam Jaishankar stated in a post on X, formerly known as Twitter, that trade discussions with US Secretary of State Marco Rubio were good and will continue discussing issues. ”Just concluded a good conversation with @SecRubio. Discussed trade, critical minerals, nuclear cooperation, defence, and energy. Agreed to remain in touch on these and other issues,” Jaishankar posted.
In response, US Ambassador to India, Sergio Gor, stated in a post on X that it was a “positive call” and the next meeting is very likely to be in February.
Easing trade frictions between the US and India is favorable for the Indian Rupee, which turned out to be Asia’s worst-performing currency in 2025 due to the steepest tariffs by Washington on imports from New Delhi. The US raised tariffs on India to 50%, added 25% punitive tariffs for buying oil from Russia.
Meanwhile, foreign investors continue to dump their stake in the Indian stock market amid a trade stalemate between the US and India. So far in January, Foreign Institutional Investors (FIIs) have remained net sellers in eight out of nine trading days, and have offloaded their stake worth Rs. 16,925.03 crore.
Meanwhile, India's WPI Inflation data for December has back in black by rising 0.83% at an annualized pace. Inflation at the wholesale level declined to 0.31% in November, while it was expected to come in positive at 0.3%.
The table below shows the percentage change of Indian Rupee (INR) against listed major currencies today. Indian Rupee was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | INR | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.03% | -0.12% | 0.03% | 0.00% | -0.28% | -0.14% | -0.03% | |
| EUR | 0.03% | -0.10% | 0.06% | 0.06% | -0.26% | -0.11% | 0.02% | |
| GBP | 0.12% | 0.10% | 0.17% | 0.14% | -0.16% | -0.04% | 0.11% | |
| JPY | -0.03% | -0.06% | -0.17% | -0.02% | -0.31% | -0.14% | -0.04% | |
| CAD | -0.00% | -0.06% | -0.14% | 0.02% | -0.29% | -0.13% | -0.02% | |
| AUD | 0.28% | 0.26% | 0.16% | 0.31% | 0.29% | 0.16% | 0.27% | |
| INR | 0.14% | 0.11% | 0.04% | 0.14% | 0.13% | -0.16% | 0.12% | |
| CHF | 0.03% | -0.02% | -0.11% | 0.04% | 0.02% | -0.27% | -0.12% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Indian Rupee from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent INR (base)/USD (quote).
Daily digest market movers: US Dollar capitalizes on steady US inflation data
- The Indian Rupee rises against the US Dollar, even as the latter trades firmly against its other peers, following the release of the US Consumer Price Index (CPI) data for December. During the press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, holds onto gains near a monthly high around 99.25.
- On Tuesday, US Bureau of Labor Statistics (BLS) showed that inflationary pressures remained steady, keeping hopes for the Federal Reserve (Fed) to maintain interest rates at their current levels intact. On an annualized basis, the US headline and core CPI came in at 2.7% and 2.6%, respectively.
- Richmond Federal Reserve President Tom Barkin called December’s inflation data "encouraging," adding that he expects price pressures to remain at modest levels in the next couple of months, Reuters reported.
- US President Donald Trump welcomed steady inflation figures and extended its force on Fed Chair Jerome Powell to reduce interest rates further. We have very low inflation. That would give ’too late Powell’ the chance to give us a nice beautiful big rate cut," Trump told reporters at Detroit, Reuters reported.
- Meanwhile, Fed’s Powell is facing criminal charges for cost overruns in the renovation of the Fed's Washington headquarters, which he called a “pretext” for not taking monetary decisions as per the president’s preferences. The event has raised concerns over the Fed’s independence.
- In response, chiefs from global central banks have shown support for Fed’s Powell, citing that “independence of central banks is a cornerstone of price, financial and economic stability in the interest of the citizens that we serve.”
- In Wednesday’s session, investors will focus on the US Producer Price Index (PPI) data for October and November, and Retail Sales data for November, which will be published at 13:30 GMT.
Technical Analysis: USD/INR consolidates around 20-day EMA for almost a month
USD/INR trades lower near 90.3810 as of writing. Price holds above the 20-day Exponential Moving Average (EMA) at 90.29, sustaining a short-term upward bias. The 20-day EMA is edging higher, supporting the path of least resistance to the upside.
The 14-day Relative Strength Index (RSI) at 53 (neutral) has eased from prior readings, confirming moderated momentum.
As long as the pair holds above the rising 20-day EMA, the bias stays positive and dips remain supported, while a daily close below that gauge could open room for a deeper retracement. RSI hovering near the midline suggests balanced conditions; a further fade in momentum would favor consolidation, whereas a pickup could underpin an extension of the advance.
(The technical analysis of this story was written with the help of an AI tool.)
Tariffs FAQs
Tariffs are customs duties levied on certain merchandise imports or a category of products. Tariffs are designed to help local producers and manufacturers be more competitive in the market by providing a price advantage over similar goods that can be imported. Tariffs are widely used as tools of protectionism, along with trade barriers and import quotas.
Although tariffs and taxes both generate government revenue to fund public goods and services, they have several distinctions. Tariffs are prepaid at the port of entry, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and businesses, while tariffs are paid by importers.
There are two schools of thought among economists regarding the usage of tariffs. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could potentially drive prices higher over the long term and lead to a damaging trade war by encouraging tit-for-tat tariffs.
During the run-up to the presidential election in November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada accounted for 42% of total US imports. In this period, Mexico stood out as the top exporter with $466.6 billion, according to the US Census Bureau. Hence, Trump wants to focus on these three nations when imposing tariffs. He also plans to use the revenue generated through tariffs to lower personal income taxes.
A US delegation led by JD Vance and Marco Rubio meets Danish and Greenlandic officials today, but markets have so far priced little risk from US threats, leaving only modest scope for any geopolitical premium to unwind, ING's FX analyst Francesco Pesole notes.
EUR/USD downside intact despite potential constructive headlines
"A US delegation, including JD Vance and Marco Rubio, will meet today with officials from Denmark and Greenland. So far, the US threats regarding Greenland have had little discernible market impact – beyond some moves in EUR/DKK forwards – so there is limited risk premium to unwind even if the talks point toward a cooperative outcome. Still, any progress could remove a lingering geopolitical 'black swan' risk for European currencies."
"Indeed, there appears to be some room for a deal. That would likely hinge on the US stepping back from any notion of 'ownership' of Greenland – an idea strongly opposed by both Denmark and Greenland – in exchange for a combination of economic partnerships and an expanded US military presence."
"Constructive headlines could slow the EUR/USD decline a touch, but we continue to target 1.1600 in the coming days."
Slight increase in downward momentum could lead to Euro (EUR) edging lower, but a break of 1.1615 appears unlikely. In the longer run, weakness in EUR from early last week has stabilized; for the time being, it is likely to consolidate between 1.1615 and 1.1730, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.
Weakness in EUR from early last week has stabilized
24-HOUR VIEW: "On Monday, EUR rebounded strongly to a high of 1.1698. In the early Asian session yesterday, when EUR was at 1.1665, we highlighted the following: 'The sharp rebound appears to be running ahead of itself, and EUR is unlikely to rise much. Today, EUR is more likely to trade in a range, probably between 1.1640 and 1.1700'. EUR subsequently traded sideways until the NY session, when it rose briefly to 1.1677 before dropping to a low of 1.1633. EUR closed slightly lower at 1.1641 (-0.22%). The price action has led to a slight increase in downward momentum. Today, we expect EUR to edge lower but a break of the major support at 1.1615 appears unlikely. On the upside, resistance levels are at 1.1660 and 1.1670."
1-3 WEEKS VIEW: "After holding a negative EUR stance for a week, we revised our view yesterday (13 Jan, spot at 1.1665), indicating that 'the weakness in EUR from early last week has stabilized'. We highlighted that EUR 'appears to have entered a consolidation phase, and for the time being, it is likely to trade between 1.1615 and 1.1730'. There is no change in our view. Looking ahead, if EUR breaks and holds below 1.1615, it could potentially trigger a decline toward 1.1585."
European Central Bank (ECB) Vice President Luis de Guindos said in a speech during European trading hours on Wednesday that there are noticeable downside growth risks due to geopolitical woes.
Additional remarks
Financial stability risks remain elevated as valuations are stretched in increasingly concentrated asset markets.
Banks should maintain sound solvency and liquidity positions to enable them to absorb potential shocks ahead.
High uncertainty in the global environment does not appear to be reflected in current market pricing.
Geopolitical risk noticeably raises downside risks to growth.
Market reaction
The impact of ECB de Guindos' comments remains insignificant on the Euro (EUR) as they lacks cues on the monetary policy outlook. As of writing, EUR/USD trades flat around 1.1645.
ECB FAQs
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy for the region. The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro. QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in 2009-11, in 2015 when inflation remained stubbornly low, as well as during the covid pandemic.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the European Central Bank (ECB) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the ECB stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Euro.
Bank of England (BoE) policymaker Alan Taylor said in a summit at National University of Singapore that he expects interest rates to fall to their neutral levels soon.
Additional remarks
I expect monetary policy to normalise at neutral sooner rather than later.
At-target inflation from mid-2026 is likely to be sustainable.
Market reaction
GBP/USD faces mild selling pressure after BoE Taylor's comments, but is still 0.14% higher near 1.3440 as of writing.
BoE FAQs
The Bank of England (BoE) decides monetary policy for the United Kingdom. Its primary goal is to achieve ‘price stability’, or a steady inflation rate of 2%. Its tool for achieving this is via the adjustment of base lending rates. The BoE sets the rate at which it lends to commercial banks and banks lend to each other, determining the level of interest rates in the economy overall. This also impacts the value of the Pound Sterling (GBP).
When inflation is above the Bank of England’s target it responds by raising interest rates, making it more expensive for people and businesses to access credit. This is positive for the Pound Sterling because higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls below target, it is a sign economic growth is slowing, and the BoE will consider lowering interest rates to cheapen credit in the hope businesses will borrow to invest in growth-generating projects – a negative for the Pound Sterling.
In extreme situations, the Bank of England can enact a policy called Quantitative Easing (QE). QE is the process by which the BoE substantially increases the flow of credit in a stuck financial system. QE is a last resort policy when lowering interest rates will not achieve the necessary result. The process of QE involves the BoE printing money to buy assets – usually government or AAA-rated corporate bonds – from banks and other financial institutions. QE usually results in a weaker Pound Sterling.
Quantitative tightening (QT) is the reverse of QE, enacted when the economy is strengthening and inflation starts rising. Whilst in QE the Bank of England (BoE) purchases government and corporate bonds from financial institutions to encourage them to lend; in QT, the BoE stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive for the Pound Sterling.
- Gold recorded a record high of $4,639.77 on Wednesday.
- The non-interest-bearing Gold attracts buyers as softer US inflation fuels growing bets on Fed rate cuts.
- The XAU/USD gains ground as geopolitical risks favor safe-haven demand.
Gold (XAU/USD) reaches the fresh record high of $4,639.77 during the Asian hours on Wednesday. Precious metals, including Gold, attract buyers amid growing bets on Federal Reserve (Fed) rate cuts following the softer inflation in the United States (US).
US inflation data for December signaled easing underlying US inflation, strengthening views that price pressures are gradually cooling. Rate futures showed investors divided between expectations of two or three Fed rate cuts this year, well above policymakers’ median projection of one.
Gold prices found support as safe-haven demand strengthened amid renewed concerns over the Fed’s independence after US prosecutors opened a criminal probe linked to Chair Powell’s June testimony. Geopolitical risks also remained elevated, with markets closely watching the possibility of US involvement in Iran’s political unrest following repeated warnings of potential military action.
Daily Digest Market Movers: Gold remains stronger as US Dollar steadies
- The US Dollar Index (DXY), which measures the value of the US Dollar against six major currencies, is edging lower after registering modest gains in the previous session. The DXY is trading around 99.10 at the time of writing, supporting dollar-denominated Gold by boosting demand from foreign-currency buyers.
- US Core Consumer Price Index (CPI), excluding food and energy, rose 0.2% in December, below market expectations, while annual core inflation held at 2.6%, matching a four-year low. The data provided a clearer sign of easing inflation after earlier releases were skewed by shutdown effects. Meanwhile, CPI increased by 0.3% month-over-month in December 2025, matching market expectations and repeating the rise seen in September. The annual inflation remains at 2.7% increase as expected.
- The US-based HRANA rights group reported on Wednesday that the death toll from Iran’s protests has reached 2,571. US President Donald Trump has urged Iranians to continue protesting, pledging that help is on the way, per Reuters.
- President Trump said on Monday that he would impose 25% tariffs on goods from any country doing business with Iran, stepping up pressure on Tehran amid widespread domestic protests. He added that the measure would take effect immediately, without providing further details. Trump warned on Sunday that action may be required before any meeting, even as he said Iran’s leadership had reached out seeking “to negotiate” after his military threats.
- US federal prosecutors threatened to indict Fed Chair Jerome Powell over his comments to Congress regarding a building renovation project, raising questions about the central bank’s independence. The Trump administration has been pressuring the Fed to cut interest rates, with Powell calling the threat a “pretext” to influence policy.
- US Nonfarm Payrolls (NFP) rose by 50,000 in December, falling short of November's 56,000 (revised from 64,000) and came in weaker than the market expectation of 60,000. However, the Unemployment Rate ticked lower to 4.4% in December from 4.6% in November, while the Average Hourly Earnings climbed to 3.8% YoY in December from 3.6% in the previous reading.
- Richmond Fed President Tom Barkin said the decline in the unemployment rate was welcome and described job growth as modest but stable. Barkin added that it is difficult to find firms outside healthcare or AI that are hiring and said it remains unclear whether the labor market will tilt toward more hiring or more firing.
Gold technical setup warns potential bearish reversal as ascending wedge emerges
Gold (XAU/USD) is trading around $4,620 on Wednesday. The technical analysis of the daily chart suggests the XAU/USD pair remains within an emerging ascending wedge pattern, signaling weakening upside momentum and warning of a potential bearish reversal if the price breaks below the lower trendline with strong volume.
The nine-day Exponential Moving Average (EMA) stands above the 50-day EMA, confirming a well-defined bullish bias. Gold price holds above the faster average, and the 50-day slope continues to advance, underscoring medium-term upside pressure. The 14-day Relative Strength Index (RSI) at 71.39 is overbought, flagging stretched momentum even as the trend stays intact.
The immediate resistance appears at the record highs near the upper boundary of the ascending wedge around $4,650. A break above this confluence resistance zone would lead the XAU/USD pair to target $4,650 level. On the downside, the initial support lies at the nine-day EMA of $4,520.01, followed by the lower ascending wedge boundary around $4,470.00.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
(The technical analysis of this story was written with the help of an AI tool.)
- AUD/USD rebounded toward the ascending channel.
- The 14-day Relative Strength Index at 56.32 signals improving momentum.
- The pair is hovering around the nine-day EMA of 0.6698.
The AUD/USD pair is recovering its recent losses registered in the previous session, trading around 0.6700 during the European hours on Wednesday. The daily chart’s technical analysis indicated a weakening bullish bias as the pair is positioned slightly below the ascending channel pattern.
The 14-day Relative Strength Index (RSI) at 56.32 is neutral and firming, confirming improving momentum. As long as RSI holds above 50, the pair could maintain the uptrend. Additionally, the AUD/USD pair holds above the rising 50-day Exponential Moving Average (EMA). The nine-day EMA is trending higher, keeping the near-term bias positive.
On the upside, a rebound within the ascending channel would improve the bullish bias and help the AUD/USD pair to target 0.6766, its highest level since October 2024. A decisive break could open a continuation higher toward the upper boundary of the ascending channel near 0.6880.
The immediate support lies at the nine-day Exponential Moving Average (EMA) of 0.6698. A close below the short-term average would undermine the tone and expose the mentioned support at the 50-day EMA at 0.6636. Further losses would open the downside toward 0.6414, the lowest since June 2025.
Australian Dollar Price Today
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.00% | -0.06% | 0.05% | 0.04% | -0.17% | -0.10% | 0.04% | |
| EUR | -0.00% | -0.06% | 0.02% | 0.04% | -0.17% | -0.10% | 0.04% | |
| GBP | 0.06% | 0.06% | 0.11% | 0.10% | -0.10% | -0.05% | 0.10% | |
| JPY | -0.05% | -0.02% | -0.11% | 0.00% | -0.20% | -0.14% | 0.01% | |
| CAD | -0.04% | -0.04% | -0.10% | -0.01% | -0.21% | -0.14% | 0.00% | |
| AUD | 0.17% | 0.17% | 0.10% | 0.20% | 0.21% | 0.07% | 0.21% | |
| NZD | 0.10% | 0.10% | 0.05% | 0.14% | 0.14% | -0.07% | 0.14% | |
| CHF | -0.04% | -0.04% | -0.10% | -0.01% | -0.01% | -0.21% | -0.14% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
(The technical analysis of this story was written with the help of an AI tool.)
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