Forex News
- Gold loses ground as the US Dollar extends its gains following last week’s Fed rate hike.
- Lower Oil prices offer little relief as inflation concerns keep US Treasury yields elevated.
- XAU/USD tests the lower Bollinger Band near $4,305, with $4,350 as initial resistance.
Gold (XAU/USD) trades on the back foot on Wednesday as expectations of further Federal Reserve (Fed) interest rate hikes lift the US Dollar (USD) and weigh on the non-yielding metal. At the time of writing, XAU/USD trades around $4,305 during American trading hours, down 1.20% on the day.
The US Dollar extends its gains since last week’s Fed decision and climbs to a two-month high despite a drop in Oil prices on positive Middle East developments. The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, trades around 100.96, up 0.40%.
The Fed raised rates by 25 basis points (bps) last week, lifting the federal funds rate to the 3.75%-4.00% range. The central bank said the move would help bring inflation back to its 2% target. Its updated projections pointed to one more hike this year. Richmond Fed President Thomas Barkin struck a hawkish tone on Tuesday, saying that “economic conditions are, if anything, firming” and warning that passing shocks from tariffs and energy are not fading. Barkin added that high inflation today risks affecting future inflation. The CME FedWatch Tool puts the chance of an October hike at around 53%.
On the Middle East front, US President Donald Trump told reporters at the United Nations General Assembly in New York on Tuesday that US officials had a very good, three-hour meeting with Iranian representatives. Iranian state media said Foreign Minister Abbas Araghchi had conveyed Tehran’s conditions for reopening the Strait of Hormuz to US envoy Steve Witkoff. These include lifting the US naval blockade, releasing frozen Iranian assets and ending the war across all “resistance” fronts.
West Texas Intermediate (WTI) Oil has snapped a five-day losing streak but remains near a more than two-week low around $90. Oil prices are well above pre-war levels, and the renewed diplomatic efforts have yet to produce a meaningful breakthrough. That leaves inflation concerns in play and keeps US Treasury yields elevated, with the rate-sensitive 2-year yield at 4.79%, near levels last seen in 2024.
The combination of a strong US Dollar, rising Treasury yields and expectations of higher borrowing costs leaves Gold vulnerable to further losses. Looking ahead, traders will watch preliminary US S&P Global Purchasing Managers’ Index (PMI) data later on Wednesday for clues on the strength of the economy.
Technical analysis: XAU/USD tests lower Bollinger Band
On the 4-hour chart, XAU/US remains under near-term bearish pressure as it holds below the Bollinger Bands’ 20-period Simple Moving Average (SMA) at $4,350 and the upper band at $4,395, highlighting persistent overhead supply. The lower band at $4,304 offers immediate technical cushioning just beneath spot, but the Relative Strength Index (RSI) around 44 and a subdued Average Directional Index (ADX) near 13 suggest weak momentum.
On the topside, initial resistance is aligned with the Bollinger middle band SMA at $4,350, followed by the upper band near $4,395, while a more significant barrier emerges at the horizontal resistance level of $4,450. On the downside, first support is seen at the Bollinger lower band around $4,304, ahead of the horizontal floor at $4,250. A deeper slide toward the $4,150 support zone would reinforce the bearish bias if the current band support gives way.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
ING analysts Ewa Manthey and Warren Patterson report that LME Copper has extended gains on tight physical conditions in China, falling inventories and holiday-related restocking, even as investor positioning remains subdued. Shanghai Copper stocks have dropped to their lowest since December 2023, while net bullish Copper futures positions have declined for six consecutive weeks despite higher prices.
Physical tightness contrasts with soft investor longs
"LME copper extended gains for a sixth consecutive session on Tuesday, its longest winning streak since May, before retreating slightly Wednesday morning, as tight physical market conditions in China continued to support prices. Falling inventories, holiday-related restocking and seasonal demand ahead of the Mid-Autumn Festival and National Day holidays boosted consumption. Shanghai copper cathode inventories fell by 14,700 tonnes to 43,900 tonnes, the lowest level since December 2023."
"While imported copper arrivals have increased, most material has flowed directly to fabricators rather than warehouses, keeping spot supplies tight."
"Investor positioning across base metals remained subdued. According to the latest COTR data, net bullish copper positions fell by 3,981 lots to 42,132 lots, the lowest level since late March and marking a sixth consecutive weekly decline despite higher prices."
"Aluminium net longs dropped by 11,623 lots to 77,423 lots, driven largely by long liquidation, while zinc net longs fell by 2,787 lots to 29,946 lots, extending their decline for a fourth straight week."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- Silver slides as the stronger US Dollar weighs on precious metals.
- The daily chart shows XAG/USD holding inside its range since mid-August, with the 100-day SMA capping the upside.
- 4-hour momentum turns weaker as Silver tests the 50-period SMA.
Silver (XAG/USD) slides nearly 3% on Wednesday as the hawkish Federal Reserve (Fed) outlook pushes the US Dollar (USD) to a two-month high and weighs on non-yielding metals. Gold (XAU/USD) is also down more than 1%. At the time of writing, XAG/USD trades around $65.
Despite the fundamental headwinds, the white metal remains within the range it has held since mid-August. Momentum indicators on the daily chart show neither buyers nor sellers in clear control, while the 100-day Simple Moving Average (SMA) near $66 continues to cap the upside.
The Relative Strength Index (RSI) is hovering near the 50 line and the Moving Average Convergence Divergence (MACD) is just below zero, which suggests a lack of directional conviction despite the underlying support from the 50-day SMA at $63.
The subdued Average Directional Index (ADX) near 12 hints that any break of these nearby support or resistance levels would be needed to re-energize trend conditions and define a clearer directional bias.
On the upside, a break above the 100-day SMA at $66 would bring the top of the recent range near $70 into view, followed by the 200-day SMA at $73. On the downside, the 50-day SMA at $63 sits close to the range floor. A break below it would expose $60, then $55.
The daily chart still shows Silver trading within its range, but the 4-hour chart tells a weaker short-term story. XAG/USD has pulled back from $67.50 and is now testing the 50-period SMA near $65, after slipping below the 100-period SMA at $65.35 and the 200-period SMA at $66.
The Relative Strength Index (RSI) is around 45 and an expanding negative Moving Average Convergence Divergence (MACD) histogram points to growing selling pressure. For buyers, the first step is to reclaim the 100-period SMA at $65.35 followed by the 200-period SMA at $66. Above that, Silver faces barriers at $67.50 and $70.50.If Silver loses the 50-period SMA, $63 is the next level to watch. A break below that area would also take the metal out of its recent range and bring $60 into focus.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
Brown Brothers Harriman’s (BBH) Elias Haddad notes the Dollar is extending gains as US economic data and policy dynamics remain supportive. September US PMI is expected to confirm US growth leadership versus Eurozone, UK and Japan. A scheduled US Treasury buyback in the 20–30-year sector may steady long yields, though sustained relief depends on lower Oil prices.
Dollar extends gains on US outperformance
"USD continues to grind higher against all major currencies in line with widening interest rate differentials. While tightening by other major central banks limits policy divergence with the Fed, US economic outperformance should keep the dollar supported. Today’s September S&P Global PMI readings will likely show the US maintaining its growth edge over the Eurozone, UK, and Japan."
"The US Treasury liquidity support buyback operation in the 20-to-30-year sector is scheduled today. The bond market backdrop is somewhat calmer now than at the September 9 operation, when a $6bn Treasury buyback in the 10-to-20-year sector failed to stop yields rising. Today’s buyback may further steady the long end of the curve, but lasting relief will require oil prices to pullback further."
"Brent crude oil prices firmed up after dropping the past five days but are holding just under $100 a barrel. Restoration of flows from Saudi Arabia's East-West pipeline and US-Iran diplomacy hope are keeping energy prices in check. US President Donald Trump said that envoys Steve Witkoff and Jared Kushner had “a very good meeting” with members of the Iranian delegation."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- The S&P Global flash PMIs for September are seen cooling a tad.
- Markets expect the Federal Reserve to maintain its cautious bias.
- EUR/USD appears subdued well south of the 1.1500 yardstick.
S&P Global will release on Wednesday its preliminary September Purchasing Managers' Indices (PMIs) for the United States, based on surveys of top private sector executives, to provide an early indication of economic momentum. The data is expected to highlight US economic resilience.
The report includes three measures: the Manufacturing PMI, the Services PMI, and the Composite PMI (a weighted combination of the two), each calibrated such that numbers above 50 indicate growth and readings below that threshold indicate contraction.
These monthly snapshots, released far ahead of many official figures, analyse everything from production and export patterns to capacity utilisation, employment, and inventory levels, offering some of the earliest signs of the economy's direction.
What can we expect from the next S&P Global PMI report?
Investors anticipate some easing in September’s flash Manufacturing PMI from 53.9 to 53.5, while the Services PMI is projected to ease from 56.5 to 56.
Although a minor decline may not scare markets, US business activity remains well in expansion territory, lending further support to the ongoing view of US ‘exceptionalism’.
A significant upside surprise in both prints would likely bolster the US Dollar by confirming the idea of a healthy economy, hence reinforcing the Fed's cautious (hawkish?) stance.
When will the September flash US S&P Global PMIs be released, and how could they affect EUR/USD?
The S&P Global Manufacturing, Services, and Composite PMIs report will be released at 13:45 GMT on Wednesday.
Ahead of the release, Pablo Piovano, Senior Analyst at FXStreet, warns that further losses in EUR/USD should not be ruled out in the current context, particularly following the break below the critical 200-day SMA above 1.1620.
If bulls manage to somehow regain the upper hand, the provisional 55-day and 100-day SMAs at 1.1526 and 1.1542, respectively, are expected to offer initial resistance prior to the more relevant 200-day SMA. Once the pair clears the latter, the next target emerges at the August top at 1.1711 (August 21).
Alternatively, Piovano notes that the continuation of the selling pressure should meet initial support at the monthly floor of 1.1353 (July 28), prior to the 2026 bottom at 1.1324 (June 24).
“Momentum indicators also favour extra declines as the Relative Strength Index (RSI) approaches the 31 level and the Average Directional Index (ADX) near 29 is indicative of a forceful trend,” Piovano adds.
Economic Indicator
S&P Global Composite PMI
The S&P Global Composite Purchasing Managers Index (PMI), released on a monthly basis, is a leading indicator gauging US private-business activity in the manufacturing and services sector. The data is derived from surveys to senior executives. Each response is weighted according to the size of the company and its contribution to total manufacturing or services output accounted for by the sub-sector to which that company belongs. Survey responses reflect the change, if any, in the current month compared to the previous month and can anticipate changing trends in official data series such as Gross Domestic Product (GDP), industrial production, employment and inflation. The index varies between 0 and 100, with levels of 50.0 signaling no change over the previous month. A reading above 50 indicates that the private economy is generally expanding, a bullish sign for the US Dollar (USD). Meanwhile, a reading below 50 signals that activity is generally declining, which is seen as bearish for USD.
Read more.Next release: Wed Sep 23, 2026 13:45 (Prel)
Frequency: Monthly
Consensus: -
Previous: 56
Source: S&P Global
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.
United Overseas Bank (UOB) analysts Quek Ser Leang and Lee Sue Ann see USD/CHF stuck in tight ranges across timeframes. Intraday, they expect the US Dollar (USD) to hold between 0.8185 and 0.8230 as prior downside momentum has faded. Over 1–3 weeks, their view remains for consolidation between 0.8155 and 0.8255, while over 1–3 months they still see scope for a rebound but not a retest of the July peak.
Dollar seen consolidating in defined bands
"24-HOUR VIEW: Following Monday’s price action, we indicated yesterday that “the slight increase in downward momentum suggests USD is likely to trade with a downside bias toward 0.8190.” We also indicated that “the next support at 0.8155 is not expected to come under threat.” We were not wrong, as USD dipped to 0.8181, rebounding to close little changed at 0.8205 (-0.05%). The downside bias has faded, and today, we expect USD to trade in a range, most likely between 0.8185 and 0.8230."
"1-3 WEEKS VIEW: After holding a positive USD view since early last week, we highlighted (18 Sep, spot at 0.8210) that “upward momentum has largely ended.” We indicated that “for the time being, USD is likely to trade between 0.8155 and 0.8255.” Our view remains unchanged."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- The US Dollar rises further to near 100.90 on hawkish Fed narrative.
- Fed officials warn that energy shocks and strong demand are both fuelling inflation.
- Investors keenly await flash US S&P Global PMI data for September.
The US Dollar trades higher as financial markets embrace hawkish Federal Reserve (Fed) view. As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.35% higher to near 100.90, the highest level seen in over seven weeks.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.37% | 0.51% | 0.33% | 0.17% | 0.71% | 0.65% | 0.23% | |
| EUR | -0.37% | 0.13% | -0.04% | -0.18% | 0.34% | 0.27% | -0.13% | |
| GBP | -0.51% | -0.13% | -0.15% | -0.32% | 0.21% | 0.14% | -0.19% | |
| JPY | -0.33% | 0.04% | 0.15% | -0.15% | 0.36% | 0.32% | -0.03% | |
| CAD | -0.17% | 0.18% | 0.32% | 0.15% | 0.52% | 0.47% | 0.12% | |
| AUD | -0.71% | -0.34% | -0.21% | -0.36% | -0.52% | -0.06% | -0.39% | |
| NZD | -0.65% | -0.27% | -0.14% | -0.32% | -0.47% | 0.06% | -0.35% | |
| CHF | -0.23% | 0.13% | 0.19% | 0.03% | -0.12% | 0.39% | 0.35% |
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 US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
A slew of Fed officials has not ruled out the possibility of more interest rate hikes in the remainder of the year in their latest commentary as they see inflation risks to be persistent due to energy shocks and strong demand.
Fed rhetoric keeps Dollar bulls on the front foot
Brown Brothers Harriman’s Elias Haddad highlights that Fed officials are reinforcing the prospect of additional tightening, noting that “more tightening is in the pipeline.” He points out that St. Louis Fed President Alberto Musalem, a non-voter this year, cautioned that “further rate hikes may be needed to curb inflation,” while Chicago Fed President Austan Goolsbee, a 2027 voter, warned of “more aggressive and more and more front-loaded” rate hikes if demand is overheating. Haddad argues this evolving policy backdrop underpins the Fed’s hawkish stance and continues to support the US Dollar’s relative appeal versus the Euro, Pound and Yen.
Meanwhile, investors await the preliminary US private sector Purchasing Managers’ Index (PMI) data for September, which will be published at 13:45 GMT. The S&P Global PMI report is expected to show that the overall business activity expanded at a moderate pace due to a slowdown in both manufacturing and the services sector.
US Dollar Index Technical Analysis
Bias: In the daily chart, Dollar Index Spot trades at 100.90. The near-term bias is bullish as price holds above the 20-day exponential moving average (EMA) at 99.84, reinforcing a constructive pattern of higher closes.
Momentum: Momentum is strong, with the Relative Strength Index (14) hovering just below the overbought threshold at 69.52, which suggests persistent buying pressure but also warns that the rally may be prone to consolidation phases.
Support: On the downside, initial support is located at the psychological level of 100.00, followed by 20-day EMA around 99.84.
Resistance: Looking up, the asset is expected to exten the rally towards the July 28 high at 101.64.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact 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 when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
- EUR/GBP accelerates its recovery and nears 0.8600 amid broad-based Pound's weakness.
- UK business activity slowed in September amid higher inflationary pressures.
- In the Eurozone, Services activity improved beyond expectations while the manufacturing sector grew at a steady pace.
The Euro (EUR) accelerates its recovery against the British Pound (GBP) on Wednesday as mixed UK Purchasing Managers' Index (PMI) figures reveal that inflationary pressures have weighed heavily on business activity in September. The EUR/GBP pair hit session highs at 0.8590, drawing closer to the top of the monthly range, at the 0.8600 area.
Preliminary UK S&P Global Purchasing Managers' Index (PMI) data showed that manufacturing activity improved to 52.0 in September from 51.7 in August, against expectations of a mild slowdown to 51.6. Services activity, on the other hand, slowed down to 51.7, from 52.5 in the previous month, below the 52.0 market consensus. This has pushed the Composite Index down to 51.7 in September, from 52.5 in the previous month.
The report highlights that the rate of input price inflation accelerated for the second month running to its highest since June, and underscores survey respondents’ complaints about increased energy, fuel and raw material costs.
Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, affirmed that “September is seeing a worrying combination of disappointingly sluggish economic growth and intensifying inflationary pressures, with subdued business confidence and high costs meanwhile continuing to discourage hiring.”
Eurozone PMIs beat expectations in September
Eurozone data, on the other hand, has been more supportive. The Preliminary Eurozone Services PMI improved to 53.0, its highest level in 10 months, beating expectations of a 51.7 reading, while Manufacturing PMI remained steady at 52.7, in line with the market consensus.
In Germany, the services sector’s activity improved to 52.9 after five months of contraction, also beating expectations of a 50.0 reading. Manufacturing activity, on the other hand, slowed down to 53.8, from 54.3, although still at levels consistent with solid business activity.
The Euro, however, is facing pressure from growing uncertainty in Germany, following the disastrous results of the ruling CDU party in state elections this week, which have put Chancellor Frederich Merz’s leadership into question. Beyond that, France’s public debt has reached its highest levels since 1978 and is expected to keep growing in the coming months amid the spiralling borrowing costs, which threaten to unleash a credit crisis.
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.
Kit Juckes at Societe Generale argues that Swedish Krona (SEK) is poised to benefit from Sweden’s superior growth outlook and expected Riksbank tightening. While inflation keeps Swedish rates subdued for now, he believes it is only a matter of time before the FX picture changes, with Sweden forecast to grow 2.2% in both 2026 and 2027, outpacing Norway and Switzerland.
Swedish Krona backed by robust growth
"The SEK is the currency most likely to benefit from the decisions of the Riksbank, SNB and Norges Bank. The market prices only a remote chance of a Riksbank move tomorrow, but a 90% probability of a hike in November and a second hike in the first quarter of next year."
"Consensus GDP growth forecasts for 2026 are 2.2% for Sweden, well ahead of the rest of Europe. Switzerland, with consensus growth of 1.3% next year, is the next best performer, followed by the UK at 1.2%, Norway at 1.0% and the Eurozone at 0.9%. "
"Of course, the interest rate outlook matters more than the growth outlook, and Swedish rates remain subdued because of weak inflation. However, it is only a matter of time before the FX picture changes."
"The consensus GDP growth forecast for Sweden in 2027 is also 2.2%, while the next-best European G10 economies, Norway and Switzerland, are expected to grow by just 1.4%."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
ING strategists Ewa Manthey and Warren Patterson note that Brent and WTI have sold off sharply as expectations of higher Saudi crude exports, progress in US-Iran talks and a surprise US inventory build ease Middle East supply concerns. Brent has fallen for six straight sessions, while US natural gas prices rise on lower production and cooler weather forecasts.
Saudi flows and inventories pressure crude
"Oil prices fell sharply on Wednesday, with Brent dropping below $99/bbl and WTI trading near $89/bbl. The sell-off was driven by expectations of rising Saudi crude exports, diplomatic progress between the US and Iran, and a larger-than-expected build in US crude inventories, all of which helped ease concerns over Middle East supply disruptions. Brent has now declined for six consecutive sessions, its longest losing streak since August 2025, bringing cumulative losses to more than 9.5%."
"Saudi Arabia has restarted operations at its East-West pipeline and could soon resume exports from the Yanbu terminal. The route, which bypasses the Strait of Hormuz, has a capacity of around 7m b/d and is expected to gradually restore lost export flows, potentially increasing global crude supplies in the coming weeks."
"On the geopolitical front, President Donald Trump described recent discussions with Iranian officials as "very productive", raising hopes for further diplomatic progress and reducing fears of prolonged supply disruptions in the region. Despite the recent correction, oil prices remain more than 60% higher year-to-date."
"Additional pressure came from the latest API data, which showed US crude inventories rose by 1.7m barrels last week, compared with expectations of a 578k-barrel draw. Meanwhile, gasoline and distillate stocks each fell by 2.2m barrels. The market will now look to the EIA inventory report later today for confirmation."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Forex Market News
Our dedicated focus on forex news and insights empowers you to capitalise on investment opportunities in the dynamic FX market. The forex landscape is ever-evolving, characterised by continuous exchange rate fluctuations shaped by vast influential factors. From economic data releases to geopolitical developments, these events can sway market sentiment and drive substantial movements in currency valuations.
At Rakuten Securities Hong Kong, we prioritise delivering timely and accurate forex news updates sourced from reputable platforms like FXStreet. This ensures you stay informed about crucial market developments, enabling informed decision-making and proactive strategy adjustments. Whether you’re monitoring forex forecasts, analysing trading perspectives, or seeking to capitalise on emerging trends, our comprehensive approach equips you with the insights needed to navigate the FX market effectively.
Stay ahead with our comprehensive forex news coverage, designed to keep you informed and prepared to seize profitable opportunities in the dynamic world of forex trading.
