Insights 
VT 
The UK RICS housing price balance for October was reported at -17%. This was lower than the expected -14%, suggesting a drop in housing market conditions.
In the forex market, AUD/JPY revisited a yearly high near 101.60, influenced by strong Australian employment data. Simultaneously, the Australian dollar gained strength, raising the Reserve Bank of Australia’s caution levels.
UK GDP Expectations
UK GDP is anticipated to show a slight expansion for Q3, supporting expectations of policy easing by the Bank of England. The GBP/USD remained below 1.3150 ahead of the UK flash GDP data release.
The EUR/USD stayed defensive below 1.1600 as markets awaited commentary from Federal Reserve policymakers. Moreover, the US Dollar Index strengthened to near 99.50 following the end of the US government shutdown.
In the cryptocurrency market, Sui (SUI) surpassed $2.00, driven by a 3.5% rise, despite the DeFi TVL dropping by 15%. This market trend reflects a general bullish sentiment within the cryptocurrency sector.
The UK housing market is showing clear signs of weakness, with the latest price balance data for October coming in at -17%, worse than expected. Recent Bank of England data also showed mortgage approvals falling to their lowest level in a year, reinforcing this cooling trend. This economic softness is putting pressure on the Bank of England to ease monetary policy.
Interest Rate Expectations
We are seeing a strong expectation for a December rate cut, with interest rate swaps now pricing in an over 85% probability of a 25-basis-point reduction. This outlook should keep the British Pound under pressure, especially with GBP/USD currently struggling to stay above 1.3120. Options traders may consider buying GBP puts to hedge against or speculate on further downside in the coming weeks.
Meanwhile, the US Dollar is strengthening now that the record-long government shutdown has ended, removing a major source of market uncertainty. This is a similar pattern to what we observed in early 2019 after a previous shutdown concluded, where a relief rally boosted the dollar. The Dollar Index pushing toward 99.50 represents a significant breakout from the range it held for most of the third quarter.
This dollar strength is pinning EUR/USD below the 1.1600 level, a trend we expect to continue as Fed commentary is anticipated. In contrast, the Australian dollar is being supported by robust employment figures, which makes its central bank less likely to cut rates than the Bank of England. This policy divergence makes currency pairs like AUD/GBP look attractive on the long side.
Gold’s resilience near $4,200 an ounce is noteworthy, especially with a stronger US dollar. This suggests underlying demand is being driven by the persistent global inflation that we have seen throughout 2024 and 2025. This environment supports a strategy of buying call options on price dips rather than trying to short into dollar strength.
