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Scotiabank strategists Shaun Osborne and Eric Theoret note GBP/USD is little changed as markets await UK labour data, Consumer Price Index (CPI) and next week’s budget, where investors expect Chancellor Healey to maintain fiscal discipline. Technically, the British Pound (GBP) has staged a strong bullish weekly reversal from the lower end of its sideways range, with scope to retest 1.3650/75 and initial resistance at the 200-day moving average near 1.3435.

Pound eyes retest of range top

"The GBP is little changed on the session. Spot is marking time ahead of tomorrow’s jobs and wage, with CPI released on Wednesday."

"Next week’s budget is starting to attract a little attention as well, with local reports suggesting that investors are banking on Chancellor Healey maintaining a steady hand on spending and borrowing to boost Gilts."

"Bullish – Solid GBP gains from Wednesday’s post-US CPI low drove a huge bullish weekly reversal on the chart (outside range week)."

"Follow through demand so far has been limited but the scale of last week’s rebound from the weekly low and net gain is hard to ignore."

"With recent price action basing around the low point of the sideways range in place since April, the pound’s solid gain last week should put spot on course to retest the upper end of the range (1.3650/75) in the coming weeks."

"Initial, key resistance sits at 1.3435 (200-day MA)."

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

• Silver gains 0.34% on Monday, supported by persistent geopolitical tensions and safe-haven demand.
• Rising US Treasury yields and a recovering US Dollar limit the precious metal's upside.
• Persistent inflation pressures reinforce expectations of further Federal Reserve tightening before year-end.

Silver (XAG/USD) trades around $57.20 on Monday, gaining 0.34% on the day at the time of writing. The white metal maintains a positive tone despite a modest recovery in the US Dollar (USD) and US Treasury yields, as persistent geopolitical uncertainty continues to support demand for safe-haven assets.

The rebound in the Greenback and US bond yields limits the upside potential for Silver, as investors reassess the monetary policy outlook of the Federal Reserve (Fed). Higher interest rates typically weigh on non-yielding assets such as precious metals, while a stronger US Dollar makes Silver more expensive for buyers holding other currencies.

The US Dollar Index (DXY), which measures the Greenback against a basket of six major currencies, trades around 101.95 after falling to 101.58 last week. Meanwhile, the benchmark 10-year US Treasury yield recovers to approximately 5.12%, following Thursday's low of 5.03%.

The recovery comes after last week's sell-off in technology stocks, driven by concerns surrounding artificial intelligence valuations, prompting investors to seek safety in government bonds and precious metals. However, expectations of additional monetary tightening continue to limit the appeal of Silver.

Inflation remains a major concern for policymakers. Elevated energy prices, linked to the ongoing conflict in the Middle East, continue to fuel price pressures across the US economy. Both the September Consumer Price Index (CPI) and Producer Price Index (PPI) exceeded market expectations, reinforcing concerns that inflation could remain above the Fed's 2% target for longer than anticipated.

Against this backdrop, analysts at Nordea maintain their expectations for further monetary tightening, forecasting one additional Fed interest rate hike before the end of the year and another in 2027. The bank argues that monetary policy remains insufficiently restrictive given the resilience of the US economy and persistent inflationary pressures.

Market expectations also reflect this increasingly hawkish outlook. According to the CME FedWatch tool, traders assign a 17% chance to an interest rate increase at the October 27-28 meeting, while the chance of a hike in December stands at 90%.

Fed Chair Kevin Warsh has refrained from providing clear guidance on the timing of future policy decisions. Speaking in Bangkok on Friday, Warsh stated, "I don't prejudge meetings," leaving investors uncertain about the central bank's next move.

Meanwhile, geopolitical developments continue to provide some support for Silver prices. Tensions in the Middle East remain elevated as negotiations between Washington and Tehran over reopening the Strait of Hormuz face significant obstacles.

Iran has offered to reopen the strategic waterway within seven days if the United States accepts its conditions. However, disagreements surrounding Tehran's nuclear programme continue to prevent a diplomatic breakthrough. Attacks on commercial vessels and ongoing fighting between Saudi Arabia and the Houthis further reinforce concerns about global energy supplies.

These developments sustain demand for safe-haven assets, helping Silver resist pressure from rising Treasury yields and a firmer US Dollar. Nevertheless, US President Donald Trump's decision to temporarily ease sanctions on Russia raises the prospect of additional energy supplies, which could alleviate some inflationary pressures.

For now, Silver remains supported by geopolitical uncertainty, although expectations of further Fed interest rate hikes could continue to restrain its upward momentum.

• USD/CAD bounces off its lowest since September 23 as Canadian inflation misses.
• Core inflation eases to 2.2%, and gasoline is up 27.8% from a year earlier.
• Canadian retail sales are due Friday, the last release before the BoC meets.

Canadian inflation came in under forecast on Monday, and USD/CAD rose off its lowest level since September 23 on the release, though it's still on track for a third straight loss. The low just above 1.4050 came in the bars before the numbers, and the price went back above 1.4100 in the release bar. It has slipped back under 1.4100 since, with Friday's last trade just under 1.4150.

Headline inflation rose to 3.1% in September against a 3.2% forecast, with gasoline up 27.8% from a year earlier. The Bank of Canada (BoC) core measure eased to 2.2% from 2.4%, and core prices were flat on the month. Analysts read the flat core month as a reason to keep the BoC's 2.25%, unchanged all year, below the Fed's 3.75%-4.00% on October 28.

BoC surveys published after the release showed consumers' five-year inflation expectations up to 3.91% from 3.39%, and firms' expectations climbed after Canada-US trade talks failed. Scotiabank and Bank of Montreal then both called for a quarter-point hike on October 28, which would cut the gap to the Fed by the same amount. The BoC published two business surveys on the same day, and sentiment rose in the one taken mostly before the talks collapsed.

On the calendar

Canada's August retail sales are due at 12:30 GMT on Friday, forecast up 1.3% after a 0.7% fall, with sales excluding autos forecast up 1% after the same fall. It's the last Canadian release before the BoC's October 28 decision.

Fed officials are in their quiet period before the October 27-28 meeting, where futures put a hike near 15% and one by December near 89%. US weekly jobless claims are due at 12:30 GMT on Thursday, forecast at 200K after 199K. The S&P Global flash Purchasing Managers' Index (PMI) surveys follow at 13:45 GMT on Friday, with services forecast at 57.9 after 58.8.

On the charts

USD/CAD went just under its 50-day Exponential Moving Average (EMA) at the session low, its first trade below the average since mid-September. The slide from the two highs near 1.4300 on October 9 and October 14 has given back about two-fifths of the climb from the September 8 low near 1.3750.

USD/CAD daily chart

Royal Bank of Canada (RBC) economist Abbey Xu notes Canadian inflation edged up to 3.1% year-over-year in September, slightly below consensus. Core measures such as Consumer Price Index (CPI) excluding food and energy and the Bank of Canada’s (BoC) CPI-trim and CPI-median remain near 2%. Xu highlights that policymakers face a soft economy but rising inflation risks from Oil, with the base case keeping rates on hold through 2026.

BoC balances soft growth and Oil risks

"The Bank of Canada is still facing an uncomfortable balance."

"Softer labour-market data and higher fixed borrowing costs give policymakers room to remain patient."

"At the same time, policymakers remain alert to the risk that persistently elevated oil prices lift inflation expectations or generate broader second-round price pressures."

"Our own base-case forecast assumes that the Bank will hold the overnight rate unchanged through the remainder of 2026 before gradually raising rates in 2027."

"However, recent communication from the Bank of Canada and Governor Macklem are denoting more urgency than the data to date might suggest and add to the risk the Bank chooses to move preemptively."

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

Brown Brothers Harriman’s Elias Haddad notes that recent AI-related equity weakness boosted bonds and weighed on the US Dollar (USD), despite a firm US Consumer Price Index (CPI) print that kept Federal Reserve (Fed) tightening expectations alive. Haddad expects the USD to recover if October PMIs confirm US growth leadership, while foreign flows into Treasuries remain a key support for USD resilience.

Dollar seen regaining ground on PMIs

"The synchronized correction in technology stocks and USD has led some to argue that the dollar is vulnerable to an AI-led equity market sell-off, as foreign investors unwind their US stock holdings. We disagree. An AI/tech unwind would simply encourage foreign investors to rotate back into safe-haven Treasuries, underpinning the dollar's defensive appeal."

"USD tends to move in tandem with net foreign purchases of US Treasuries and in the opposite direction to net foreign purchases of US equities. That challenges the view that weaker foreign demand for US stocks would automatically drag USD lower."

"We expect USD to recover this week especially if the October PMIs (Friday) confirm the US retains its growth edge over other major economies."

"The Treasury rally and USD pullback came despite a hot US September CPI print that reinforced the Fed’s hawkish bias. Nevertheless, calls for patience from many Fed officials (Bowman, Williams, Waller, Daly) kept expectations of a back-to-back October hike in check. Fed funds futures imply less than 20% odds of a hike on October 28 and still fully price a 25bps increase to 4.00-4.25% on December 9."

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

• WTI is set to end a seven-session winning streak within Friday's range.
• The waiver lifts tariffs of up to 100% on the biggest buyers of Russian energy.
• The EIA's US inventory count is due Wednesday after an 8.6 million barrel fall.

A waiver of new Russia sanctions has WTI on track for its first losing session in eight, though the price hasn't left Friday's range. Friday's high just above $99.00 was the highest since mid-September. The session low just above $96.50 gave back about a fifth of the seven-session climb, and the price is back near $98.00.

President Trump signed an order on Friday waiving the Russia sections of the Graham Act, including tariffs of up to 100% on the five biggest buyers of Russian Crude Oil. Russia supplied nearly half of India's Crude Oil imports earlier this year, and under the tariffs India would have had to replace them, US Crude Oil included. The act became law in September after an 86-11 Senate vote, and its Russia sections were waived before they came into force.

Kpler put the seven-day average of Gulf Crude Oil flows near 8.5 million barrels a day, from more than 20 million a week earlier. Iran's Revolutionary Guard said a tanker hit a mine in the southern Strait of Hormuz on Sunday. WTI loads at Texas ports, so a buyer short of Gulf cargoes can replace them with barrels that never go near the strait.

On the calendar

The American Petroleum Institute (API) publishes its US inventory count at 20:30 GMT on Tuesday, and the Energy Information Administration (EIA) follows at 14:30 GMT on Wednesday. The EIA's figures cover the week to October 16, the first US count since Gulf flows fell, after commercial stocks dropped 8.6 million barrels the week before.

Secretary of State Rubio meets Indian External Affairs Minister Jaishankar in Mumbai on Tuesday. He said on Monday that their trade deal, which he called very close, was one reason for Friday's waiver, and that the waived tariffs applied to India's Russian cargoes.

On the charts

The seven-session run began from a close just under the 50-day Exponential Moving Average (EMA) on October 7, and the average has risen to just above $90.00 since. At its Friday high the price had recovered more than four-fifths of the fall from the September 15 high just above $102.00 to the October 6 low near $86.50.

WTI spot daily chart

• The Australian Dollar gains 0.51% on Monday, approaching the psychological 0.7000 level.
• Hawkish comments from an Australian central bank official reinforce expectations of a restrictive monetary policy.
• China's stronger-than-expected economic growth provides additional support to the Australian currency.

AUD/USD extends its gains on Monday, trading around 0.6980, up 0.51% at the time of writing. The Australian Dollar (AUD) benefits from hawkish comments by a Reserve Bank of Australia (RBA) official and stronger-than-expected economic growth in China, Australia's largest trading partner.

RBA Assistant Governor Christopher Kent indicated that there are reasonable signs that neutral interest rates are rising both in Australia and globally. These remarks suggest monetary policy may need to remain restrictive longer than previously anticipated, providing support to the Australian Dollar.

The neutral interest rate refers to the level at which monetary policy neither stimulates nor restricts economic activity. An increase in this rate could imply that the RBA has less room to ease monetary policy without reigniting inflationary pressures.

Meanwhile, encouraging economic data from China reinforce the positive sentiment surrounding the Aussie. China's Gross Domestic Product (GDP) expanded by 4.5% YoY in the third quarter, exceeding market expectations and accelerating from the previous quarter's 4.3% growth.

The stronger-than-expected figures suggest that the world's second-largest economy is maintaining its growth momentum despite persistent economic challenges. This development is particularly supportive of the Australian Dollar, given Australia's close trade relationship with China and its dependence on Chinese demand for commodities, notably Iron Ore.

The combination of resilient Chinese economic activity and a relatively hawkish RBA outlook provides a favorable backdrop for the Australian currency. Stronger Chinese demand could support Australian exports, while expectations of a prolonged restrictive monetary policy could help maintain the attractiveness of Australian assets to international investors.

However, the outlook for AUD/USD also depends on developments surrounding the US Dollar (USD). The relative monetary policy trajectories of the RBA and the Federal Reserve (Fed) remain an important factor for the currency pair, with any shift in US interest rate expectations potentially influencing the Australian Dollar's upward momentum.

Investors will therefore continue to monitor upcoming economic indicators and central bank communications to assess whether the current favorable conditions can sustain the Australian Dollar's recovery.

Aussie Dollar holds firm near range highs despite valuation concerns

Strategists at Brown Brothers Harriman note that the Aussie remains resilient, with “AUD is outperforming, with AUD/USD trading near the top of its three-week 0.6900-0.7000 range.” They highlight recent comments from RBA Assistant Governor Christopher Kent, who observed that the “Aussie dollar at the moment is marginally above the long-run equilibrium estimates for the real trade-weighted index,” while the IMF “estimates AUD overvaluation at 17% on a real effective exchange rate basis.” Even so, BBH argues that “AUD/USD is generally in line with real and nominal 2-year Australia-US interest rate differentials, suggesting its lofty valuation poses little immediate downside risk.”

AUD/USD technical analysis

In the one-hour chart, AUD/USD trades at 0.6983, holding a constructive near-term bullish bias as it advances above both the 100-period simple moving average (SMA) at 0.6961 and the 200-period SMA at 0.6964. The pair is pressing into the upper end of the recent range, while the Relative Strength Index (14) near 59 stays below overbought territory and suggests steady, but not extreme, upside momentum.

On the topside, immediate resistance is located at the horizontal barrier around 0.6995, followed by a higher cap at 0.7014 if buyers extend the move. On the downside, initial support is seen at the 200-period SMA at 0.6964, then the 100-period SMA at 0.6961, with further protection at the horizontal levels of 0.6950 and 0.6932, where a deeper pullback would be expected to attract dip-buying interest.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

• Gold struggles to extend early gains as the US Dollar and Treasury yields regain some ground.
• Persistent inflation risks keep another Fed interest rate hike on the table before year-end.
• The technical outlook is mixed, with XAU/USD trading below its 20-day SMA while the MACD turns positive.

Gold (XAU/USD) reverses its earlier gains on Monday after opening the week on a positive note. The US Dollar (USD) and US Treasury yields find some footing following last week’s pullback as traders assess the Federal Reserve’s (Fed) interest-rate path and geopolitical developments. At the time of writing, XAU/USD trades around $4,143 after reaching an intraday high of $4,190.

The US Dollar and yields corrected sharply lower last week, driven by an AI-led equity sell-off that prompted traders to rotate into government bonds and safe-haven Gold. However, the metal’s gains were modest as expectations of additional interest rate hikes by the Federal Reserve (Fed) continued to weigh on the non-yielding metal while cushioning the downside in the US Dollar and Treasury yields.

The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 101.95 after falling to 101.58 last week. Weakness in the Euro (EUR) amid mounting fiscal concerns and political unrest in France provides additional support to the USD. Meanwhile, the benchmark 10-year US Treasury yield stands near 5.12%, recovering from Thursday’s low of 5.03%.

Elevated energy prices linked to the war in the Middle East continue to feed into inflation, with both September’s Consumer Price Index (CPI) and Producer Price Index (PPI) reports coming in hotter than expected. This reinforces expectations of another rate hike by year-end as the Fed seeks to bring inflation back to its 2% target.

Analysts at Nordea say they are leaving their Federal Reserve outlook unchanged, stressing that “we keep our Fed forecast unchanged” and “still expect one more hike this year and another next year, with the risks tilted to the upside.” In their view, “monetary policy still does not look restrictive enough for an economy in this shape,” particularly as “inflation is still clearly above target, and the September CPI shows it moving up, not down.”

Against that backdrop, Nordea argues that “long-term yields above 5% are not particularly restrictive,” and concludes that “all in all, our view is unchanged. A strong economy and above-target inflation still call for tighter policy. Higher long-term yields do not change that call. They mostly reflect the same strong economy that keeps the Fed hiking.”

Recent remarks from Fed officials also suggest they remain open to further tightening, although they have not strongly signaled a hike at the October 27-28 meeting. Speaking in Bangkok on Friday, Fed Chair Kevin Warsh stuck to his stance of avoiding forward guidance, saying, “I don't prejudge meetings.” The CME FedWatch Tool shows traders pricing in a 15% chance of a rate hike this month and an 89% chance of a hike in December.

On the geopolitical front, Iran has renewed its offer to reopen the Strait of Hormuz within seven days if Washington accepts its conditions, although negotiations remain stalled over Tehran’s nuclear programme. Meanwhile, continued attacks on vessels in the Strait of Hormuz and fighting between Saudi Arabia and the Houthis keep supply risks elevated. However, US President Donald Trump’s decision to temporarily waive sanctions on Russia has raised expectations of increased energy supplies.

Technical analysis: Mixed technical signals keep bulls cautious below $4,200

On the daily chart, XAU/USD holds a mildly bearish near-term bias as price sits just under the 20-day simple moving average (SMA) embedded in the Bollinger Bands at $4,182. The failed recovery through this middle band hints that recent gains are losing traction, even as the Moving Average Convergence Divergence (MACD) indicator turns positive and extends higher, suggesting only tentative upside momentum, while the Relative Strength Index (RSI) near 43 keeps the broader tone slightly soft and the Average Directional Index (ADX) below 20 signals a weak underlying trend.

On the topside, the Bollinger middle band and 20-day SMA at $4,182 act as immediate resistance. A daily close above this pivot would be needed to ease the current downside pressure. On the downside, initial support is seen at the lower Bollinger Band near $4,051, where buyers may look to defend the recent range floor if the pullback accelerates.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

• The Swiss Franc weakens as recovering US Treasury yields support the Greenback.
• Hotter US CPI and PPI figures reinforce expectations of another Fed interest rate hike before year-end.
• Switzerland’s low inflation keeps rate-hike expectations muted.

USD/CHF trades with a mild positive bias on Monday as the US Dollar (USD) steadies following last week’s pullback, which was driven by a sharp decline in US Treasury yields. At the time of writing, the pair trades around 0.8263, up 0.27% on the day.

The benchmark 10-year US Treasury yield rises around 7 basis points (bps) to 5.13%, recovering after touching 5.03% on Thursday, its lowest level since September 23. Yields fell sharply last week as an AI-led equity sell-off prompted traders to rotate away from riskier assets and into government bonds.

The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 101.95 after falling to 101.58 on Friday. Weakness in the Euro (EUR) due to political unrest and mounting fiscal concerns in France provides additional support to the US Dollar.

Expectations of further interest rate hikes by the Federal Reserve (Fed) also cushion the Greenback’s downside. US inflation data released last week surprised to the upside, with headline Consumer Price Index (CPI) rising 0.6% MoM and 3.7% YoY in September. Core inflation rose to 2.6%, exceeding expectations of 2.5%. Producer prices also came in stronger than expected, reinforcing concerns that inflation could remain above the Fed’s 2% target for longer.

However, traders widely expect the Fed to keep interest rates unchanged this month after raising the federal funds rate by 25 basis points in September. Fed Chair Kevin Warsh avoided offering forward guidance on Friday, saying, “I don’t prejudge meetings.” The CME FedWatch Tool shows traders pricing in a 15% probability of a rate hike at the October 27-28 meeting and an 89% chance of an increase by December.

Prospects of further Fed tightening keep the Swiss Franc (CHF) on the back foot, particularly as the Swiss National Bank (SNB) maintains its policy rate at 0%. The bar for an SNB rate hike appears relatively high, as inflation remains within its 0%-2% price stability range. However, safe-haven demand linked to geopolitical tensions and political unrest in France could support the Swiss Franc against other major currencies.

• GBP/USD holds above 1.3300 despite persistent bearish pressure.
• December Fed hike odds reach 91% as Treasury yields climb.
• UK CPI and employment data could reshape November BoE expectations.

The Pound Sterling (GBP) holds steady against the US Dollar (USD) at the start of the week, with this week’s UK inflation data likely to influence its near-term direction amid elevated energy prices linked to the US-Iran conflict. At the time of writing, GBP/USD holds above 1.3300, up 0.07%.

GBP/USD steadies as rising Treasury yields and December Fed hike expectations limit Sterling's upside

Last week, US inflation data on the consumer and producer side was higher than expected and was noted by the White House National Economic Adviser Kevin Hassett, who said at CNBC that inflation looks like “it is needing some work.”

Despite this, speculators trimmed their Fed-hawkish bets for the October meeting but seem certain that the US central bank will raise interest rates by 25 basis points in December, with odds at 91%, according to Prime Terminal.

Meanwhile, the US Dollar Index (DXY), which measures the buck’s performance against six currencies, gains 0.13% to 101.91. US Treasury yields are also rising, with the US 10-year T-note up 4.6 bps at 5.127%.

Global yields are jumping, driven by France’s riots, which sent yields on French debt higher, amid growing unrest over fiscal policy and next year's election.

In the US, the economic docket is light with Fed speakers entering the blackout period ahead of the October 27-28 meeting. Housing data, the ADP Employment Change 4-week average, jobless claims and S&P Global Flash PMIs could dictate the Greenback’s direction, along with geopolitics.

In the UK, the schedule is busy, with the release of jobs and inflation data on Tuesday and Wednesday, respectively, a speech by Bank of England (BoE) Governor Andrew Bailey and Retail Sales data.

BoE Governor Bailey noted on Friday that energy prices seem to have had “limited wider effects on British prices,” but warned that it’s too soon to “draw firm conclusions”

UK GDP surprised investors, with the economy growing solidly in August. In the meantime, eyes are on the release of the Autumn Budget next week, which poses downside risks to the British Pound if Chancellor John Healey fails to deliver growth without missing the fiscal goals set by his predecessor, Rachel Reeves.

GBP/USD Price Forecast: Technical outlook

In the daily chart, GBP/USD trades at 1.3319, holding a mildly bearish near-term bias as it remains capped beneath a dense cluster of longer-term simple moving averages (50, 100 and 200-day SMA) and a descending trend line around the mid‑1.34s. The pair has slipped back under the most recent break level while the Relative Strength Index (14) hovers just above 50, hinting at only modest upside momentum that so far has not been strong enough to challenge the overhanging resistance structure.

On the topside, initial resistance is seen at the downward trend line coming in near 1.3408, followed closely by the 50, 100 and 200-day SMA cluster around 1.3414, where a daily close above would be needed to ease the current bearish pressure and open the way toward the next ascending trend-line barriers near 1.3612 and 1.3798. On the downside, immediate support aligns with the prior descending resistance line now turned floor around 1.3275, and a break back below this level would expose the pair to a deeper retracement toward earlier cycle lows.

(The technical analysis of this story was written with the help of an AI tool. Know more.)