Forex News

TD Securities strategists argue that a Democratic blue sweep is modestly negative for the US Dollar (USD) via relative equities, rates and growth. They highlight that weaker US exceptionalism, softer fiscal impulse and lower Iran escalation risk could all weigh on USD performance versus ex-US assets and safe havens.

Blue sweep seen modestly USD negative

"A blue sweep is modestly USD-negative, weakening the pillars of US exceptionalism. Greater scrutiny of AI and deregulation, a smaller fiscal impulse, and potential data-center constraints could weigh on US equities, growth, yields, and Fed pricing. Meanwhile, reduced expectations of Iran escalation favor ex-US assets and growth."

"A blue sweep is modestly USD-negative from the relative equity, rates, and growth channel."

"Foreign capital has increasingly entered the US through equities, reinforcing the dollar through stronger growth expectations, higher yields, and equity outperformance. If the AI narrative weakens, investors may seek safety in USTs, JPY, or CHF while reducing US equity exposure and hedging more dollar risk. The USD could weaken against alternatives while strengthening against KRW, TWD, and other high-beta currencies."

"Meanwhile, a smaller fiscal impulse and potential constraints on data center build-out could weigh on US growth expectations, treasury yields, and Fed hike pricing. This will weaken any USD boost from the relative rates channel as well."

"Lastly, potentially lower Iran escalation risk should further favor ex-US equities and global growth expectations outside the US. Together, this leaves the USD facing headwinds through the relative rates, growth, and equity channels."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

Bank of England (BoE) Governor Andrew Bailey speaks on the policy outlook and responds to questions from the press following the decision to raise the policy rate by 25 basis points (bps) to 4% after the November meeting.

BoE press conference key quotes

"Market curve prices further restrictiveness into next year, but this largely reflects risk premia, not expected rates, this seems fair reflection of energy risks."

"Latest fall in oil prices is positive news."

"Unless there is progress towards resolving conflict, further increase in bank rate may be warranted."

"Good news on Iran conflict would reduce risk of further inflation pressures, could lead to CPI peak somewhat below 5%."

"Had we known what would happen in last 48 hours, rate decision would still have been the same."

"If we do see a peace process, that would be a good thing and lower energy prices."

"Encouraging news of past 48 hours does not mean we can say there will be no need to raise rates again."

"I do not think we have moved too late."

"I will not sign up to "two and done" outlook for rates."

This section below was published at 12:00 GMT to cover the Bank of England's Monetary Policy Report and the initial market reaction.

The Bank of England (BoE) announced on Thursday that it raised the policy rate by 25 basis points (bps) to 4% following the November meeting. This decision came in line with the market expectation. Eight members of the Monetary Policy Committee (MPC) voted in favor of the decision while policymaker Catherine Mann voted for a 50 bps increase.

BoE Monetary Policy Report key highlights

"CPI expected to peak at around 5% in Q2 2027 in central scenario."

"Now enough inflationary pressure in pipeline caused by energy prices to raise rates."

"Doesn't seem likely to be last increase unless Middle East conflict resolved."

"Hike shouldn't be seen as first in inevitable long sequence of increases."

"BoE bumps up GDP growth forecast: sees 1.6% in 2026, 1.3% in 2027, 1.2% in 2028 (July: 1.1% in 2026, 1.1% in 2027, 1.7% in 2028)."

"Central forecast shows CPI to return to 2% target in Q3 2028 (July: fall below target in Q1 2028)."

"BoE sees headline Q3 GDP growth of +0.7% QQ (Sept: +0.4%)."

"Central forecast shows CPI at 4.4% in Q1 2027, 3.1% in Q1 2028, 1.9% in Q1 2029 (July: 3.2% in Q1 2027, 1.7% in Q1 2028, 1.9% in Q1 2029)."

"Government budget likely to cut inflation by 0.25 percentage points by Q2 2027, then raise by same amount a year later as effect unwinds."

"Budget likely to boost demand by 0.1% in 2026-27, drag by a little over 0.1% by 2029-30."

"Still limited evidence of second-round effects from higher energy prices."

"Stronger than expected activity data added to case for tighter monetary policy."

"GDP growth likely to fall back in coming quarters."

"BoE's Lombardelli, Pill see case for further "near term" rate hike."

"Some of upward market curve explained by risk premia not expected rates; current restrictiveness broadly appropriate."

"Adverse scenario shows CPI peaking at 6.2% in Q3 2027."

"Market rates imply bank rate at 3.9% in Q4 2026, 4.9% in Q4 2027, 4.9% in Q4 2028, 4.7% in Q4 2029."

"BoE sees unemployment rate of 4.8% in 2026, 4.9% in 2027, 5.1% in 2028 (July: 5.0% in 2026, 5.3% in 2027, 5.2% in 2028)."

"BoE sees private-sector regular wage growth of 3.2% YY in Q4 2026, 3.5% in Q4 2027, 3.4% in Q4 2028 (July: 3.0% in Q4 2026, 3.1% in Q4 2027, 3.1% in Q4 2028)."

"BoE sees real post-tax labour income growth of -0.1% in 2026, -0.6% in 2027, 1.0% in 2028 (July: 0.1% in 2026, 0.5% in 2027, 1.1% in 2028)."

Market reaction to BoE Moentary Policy Report

GBP/USD recovered slightly from session lows with the immediate reaction to the BoE's Monetary Policy Report and was last seen trading virtually uchanged on the day at 1.3470.

This section below was published as a preview of the Bank of England's (BoE) interest rate decision at 08:00 GMT.

• The Bank of England is expected to raise its policy rate to 4.00%.
• UK inflation figures remain well above the BoE’s goal.
• GBP/USD remains close to the 1.3500 mark, or two-month highs.

The Bank of England (BoE) is set to reveal its latest monetary policy decision on Thursday, coinciding with its seventh rate-setting meeting of 2026.

Market analysts expect the ‘Old Lady’ to increase its policy rate by a quarter percentage point to 4.00%, the highest level since November 2025.

As usual, the Monetary Policy Committee’s (MPC) decision will be followed by the publication of the meeting Minutes, which will detail the internal discussions that shaped the outcome.

The central bank maintained interest rates at 3.75% in September amid a split vote from the MPC (6-3), indicating an impasse to assess the potential effects on the UK economy of the still ongoing crisis in the Middle East.

Attention remains broadly on inflation and geopolitics

In his latest comments, Bank of England Governor Andrew Bailey said above-target UK inflation remained “enormously frustrating" but cautioned that it was still too early to assess the strength of any second-round effects. So far, those effects appear subdued, with businesses focusing on cutting costs rather than raising prices more aggressively.

Bailey said the UK economy had proved more resilient than expected, although activity remained weaker than the Bank would like. He also noted that developments in the Middle East were the main factor driving gilt yields, adding another layer of uncertainty to the policy outlook.

Overall, Bailey’s message was cautious rather than decisively hawkish. The BoE still needed more evidence on whether the inflation shock is becoming embedded before it can form a firm view on the next policy move.

How will the BoE interest rate decision impact GBP/USD?

Market participants appear broadly inclined toward a rate hike on Thursday at 12:00 GMT.

Beyond the rate decision per se, attention will also focus on the vote split among MPC members, which might be a market mover for the British Pound if it indicates an unusual outcome.

In the run-up to the meeting, GBP/USD advances for the fourth week in a row, looking to further fade the sharp downward trend initiated in late August.

"Cable keeps the multi-week recovery well in place, managing to clear its key 200-day SMA around 1.3420, therefore allowing for the rebound to continue," said Pablo Piovano, Senior Analyst at FXStreet. Next on the upside comes the September high at 1.3567 (September 9), followed by the August ceiling at 1.3675 (August 21).

On the downside, there are no support levels of note until the 2026 floor at 1.3137 (October 14), prior to the November 2025 valley at 1.3010 (November 4), Piovano adds.

“Momentum indicators seem to favour extra gains, as the Relative Strength Index (RSI) climbs past the 65 level, while the Average Directional Index (ADX) around 22 is indicative of a fairly firm trend,” he concludes.

Bank of England (BoE) Governor Andrew Bailey speaks on the policy outlook and responds to questions from the press following the decision to raise the policy rate by 25 basis points (bps) to 4% after the November meeting.

Key takeaways

"Encouraging news of past 48 hours does not mean we can say there will be no need to raise rates again."

"I do not think we have moved too late."

"I will not sign up to "two and done" outlook for rates."

"Situation is so volatile that we can't put weight on two days news that hasn't been backed up by clear move to peace process."

Bank of England (BoE) Governor Andrew Bailey speaks on the policy outlook and responds to questions from the press following the decision to raise the policy rate by 25 basis points (bps) to 4% after the November meeting.

Key highlights

"Market curve prices further restrictiveness into next year, but this largely reflects risk premia, not expected rates, this seems fair reflection of energy risks."

"Latest fall in oil prices is positive news."

"Unless there is progress towards resolving conflict, further increase in bank rate may be warranted."

"Good news on Iran conflict would reduce risk of further inflation pressures, could lead to CPI peak somewhat below 5%."

"Had we known what would happen in last 48 hours, rate decision would still have been the same."

"If we do see a peace process, that would be a good thing and lower energy prices."

• EUR/GBP remains near multi-month lows after the BoE’s widely expected rate hike.
• The BoE raises interest rates to 4.00%, delivering its first hike since 2023.
• Governor Bailey leaves the door open to further tightening as inflation is projected to reach around 5% by mid-2027.

The British Pound (GBP) struggles for direction against the Euro (EUR) on Thursday as the Bank of England’s (BoE) interest rate hike draws a muted market reaction, with the move already priced in. At the time of writing, EUR/GBP trades around 0.8331, down a modest 0.05% on the day, and remains pinned near levels last seen in April 2025.

The BoE raised its benchmark interest rate by 25 basis points (bps) to 4.00% on Thursday, with the Monetary Policy Committee (MPC) voting 8-1. External MPC member Catherine Mann favoured a larger 50 bps increase to 4.25%.

The move marks the BoE’s first rate hike since 2023, joining other major central banks in tightening policy to contain inflation driven by higher energy costs stemming from the war in the Middle East.

The decision reflects growing concern that the prolonged conflict could keep inflation high for longer. UK Consumer Price Index (CPI) inflation rose to 3.5% in September and is now projected to reach around 5% by the middle of 2027.

Although evidence of higher energy costs feeding through to broader prices and wages remains limited, policymakers judged that “the degree of inflationary pressure in the pipeline is now sufficient to warrant an increase in Bank Rate.” Stronger-than-expected economic activity also added to the case for tighter policy.

Governor Andrew Bailey signalled openness to another hike unless inflation risks ease. “Without news which softens the risks to inflationary pressures, I can see the argument for a further increase in rates,” Bailey said. Chief Economist Huw Pill similarly argued that a single 25 bps increase is unlikely to be sufficient.

However, the MPC stressed that “monetary policy is not on a pre-set path,” with future decisions depending on energy prices and how they feed through to wages, broader prices and economic activity. The Committee said it would adjust Bank Rate as needed to return CPI inflation to its 2% target in the medium term.

OCBC strategists Sim Moh Siong and Christopher Wong note that Gold has rebounded following the US midterm elections, supported by a weaker US Dollar (USD), lower Treasury yields and softer Oil prices, reclaiming the $4,000 level. The metal is responding more positively to a favourable macro backdrop, prompting cautious optimism that it may be finding its footing. However, sustained gains would likely require easing Fed tightening expectations and a continued recovery in investment demand.

Metal finds footing with softer Dollar

"Precious metals rebounded sharply following the US midterm elections, supported by a softer USD, lower US Treasury yields and oil prices as markets reassessed the implications of political gridlock for US fiscal policy and growth."

"Gold rallied around 3%, reclaiming the 4000 level. Expectations that political gridlock may constrain fiscal expansion and weigh on US growth provided some relief to yields, while slippage in oil prices also lent support."

"Encouragingly, gold has started to respond more positively to a favourable macro backdrop, following its earlier reluctance to benefit from lower yields and USD weakness."

"We are cautiously optimistic that gold may be finding its footing, although further gains would likely require some moderation in Fed tightening expectations and continued recovery in investment demand."

"Mild bearish momentum on daily chart faded while RSI rose. Some upside risks not ruled out."

"We continue to monitor real yields, USD direction, oil prices and ETF flows for signs of sustained buying interest. Friday’s US payrolls will be another important test."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

• GBP/USD bounces up to 1.3480 from session lows near 1.3450 as the BoE hikes interest rates for the first time in three years.
• The BoE raised its bank rate by 25 basis points to 4% in a unanimous vote.
• Some policymakers have assessed that one interest rate hike will not be enough.

The British Pound (GBP) has bounced from session lows against the US Dollar (USD) on Thursday, as the Bank of England hiked interest rates, as widely expected, with some policymakers calling for further monetary tightening. The GBP/USD pair holds minor daily gains at 1.3480, after having rallied about 1.3% over the last seven days.

The Bank of England’s monetary policy committee voted unanimously to raise its benchmark interest rates by 25 basis points to 4%, as widely expected. The central bank has also revised the projections of Gross Domestic Product (GDP) growth for the year 2027 up to 1.3%, from the previous 1.1%, and some members signalled further rate hikes to follow.

The focus is now on Governor Andrew Bailey’s press release, which will start in a few minutes, and is likely to give further insight into the BoE’s near-term monetary policy plans.

The British Pound had been trading higher against most peers over the last few days, as a string of upbeat UK macroeconomic data paved the path for the central bank to raise interest rates for the first time since August 2023.

Looking ahead, analysts at MUFG Bank see the market as more hawkish than the BoE: “We expect the BoE to signal that further tightening is likely to be required but not as much as currently priced in. The UK rate market had been pricing in 4-5 hikes, although that has been scaled back as the price of oil has dropped sharply this week." With this in mind, it seems likely that a more cautious Bailey might disappoint investors and trigger some Pound reversal.