United Kingdom retail sales for November showed a decline of -0.1% month-on-month. This figure fell short of the expected increase of 0.4%.
EUR/NOK dropped following the Norges Bank meeting, and the EUR/USD dipped as the US Dollar gained traction. Despite softer US inflation data, USD remained strong, impacting gold and cryptocurrency markets. Gold stayed below $4,350 despite a cooling US CPI, whilst Bitcoin, Ethereum, and Ripple saw declines of nearly 3%, 8%, and 10%.
Bank Of Englands Interest Rate Decision
The Bank of England reduced interest rates to 3.75%, though the decision was unexpectedly hawkish, resulting in stronger sterling. The future direction of rates is uncertain, with further cuts possible in early 2024.
In other news, Ethereum’s price stands at $2,920, with concerns regarding its growing state affecting decentralisation. The Ethereum Foundation proposed solutions include state expiry and partial statelessness to address these challenges.
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UK Retail Sales Impact
The miss on UK retail sales for November is a significant bearish signal for the British Pound. This data suggests consumer confidence is faltering right before the critical holiday season. We should view this as a serious headwind for any long Sterling positions, especially against a resilient US dollar.
The Bank of England’s recent rate cut to 3.75% was a divided decision, telling us they are reluctant to cut aggressively. With the latest ONS data showing UK CPI inflation at 3.1% in November 2025, still stubbornly above the Bank’s 2% target, their hands are tied. This conflict between a slowing economy and sticky inflation suggests continued volatility, making options strategies that profit from price swings in GBP/USD attractive for the coming weeks.
We are seeing the US Dollar stay strong even though US inflation data has softened, with the November CPI print coming in at 2.8%. This indicates that the market is more focused on the Federal Reserve’s policy stance, which remains higher for longer compared to its G7 peers. It appears the dollar will remain the favoured currency as long as this perception holds.
This strength in the dollar is limiting any rallies in EUR/USD, keeping it near the 1.1700 level. While the idea of a policy divergence between the Fed and the European Central Bank might offer some support for the Euro, the dollar’s dominance is the main story for now. We see better opportunities in selling short-term bounces in the pair rather than betting on a sustained breakout.
The broader risk-off mood is also being shaped by the Bank of Japan’s recent rate hike. That move was the most telegraphed policy shift of the year, meaning it was fully priced in, which is why the Yen’s reaction was muted. However, it signals a definitive end to an era of global easy money, likely putting continued pressure on risk assets like cryptocurrencies.
We have seen similar market patterns before, especially during the global tightening cycle of 2022-2023. Back then, disappointing economic data from one region often led to its currency underperforming for weeks, regardless of central bank commentary. The current setup with weak UK retail sales feels very familiar and supports a cautious to bearish stance on Sterling through the start of 2026.
