Insights 
VT 
The UK’s Index of Services remained steady at 0.4% over three months to August. The UK GDP increased by 0.1% during the same period, aligning with initial expectations.
Manufacturing In The UK
Manufacturing Production in the UK outperformed predictions in August, giving some support to the Pound Sterling amidst a stable US Dollar recovery. In financial markets, the EUR/USD remained above 1.1650 as traders awaited central bank discussions.
Gold continued to show strength, trading near an all-time high amid economic concerns such as a potential US government shutdown and US-China trade conflicts. Meanwhile, Dogecoin stabilised around $0.19, experiencing a 5% decline this week, yet on-chain data suggested potential recovery.
The S&P 500 showcased an “inside day” pattern after a 2.7% drop and subsequent rebound. This pattern displayed market uncertainty despite recent bounces. The situation poses questions for traders about market re-entry opportunities.
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With the UK Index of Services showing no growth, we are looking at a stagnant economy. This follows the technical recession we saw back at the end of 2023, suggesting any recovery since has been extremely fragile. Derivative traders should consider protective put options on the FTSE 100, as any further negative data could easily tip the index lower.
Central Bank Divergence
There is a clear divergence between central banks that we must watch. The European Central Bank is signaling an end to its rate-cutting cycle, which began in mid-2024, creating a hawkish tilt for the Euro. Conversely, persistent worries over US growth are fueling bets on further Federal Reserve cuts, which explains the EUR/USD strength above 1.1650.
Uncertainty is elevated in the US equity markets, reflected in the S&P 500’s indecisive trading patterns. Lingering tensions from the 2024 election and ongoing trade disputes have kept the CBOE Volatility Index (VIX) elevated, currently hovering around 19, well above its historical average. This environment is ideal for traders using options strategies like straddles to profit from expected price swings.
The flight to safety is driving gold toward its all-time highs, pushing toward $2,500 an ounce. This move is supported by significant and sustained gold purchases by central banks, which hit record levels throughout 2024 and have continued in 2025. Buying call options on gold futures appears to be a solid strategy to capitalize on this upward momentum.
Even with weak domestic data, the British Pound is holding firm above 1.3400 against the US Dollar, indicating underlying resilience. In Australia, rising unemployment is not yet forcing the Reserve Bank of Australia to cut rates, a stance that supports the Aussie dollar. This makes currency crosses like AUD/JPY attractive, especially as it climbs toward 98.50.
