Gbp Usd Gains And Euro Usd Steady
The GBP/USD showed gains approaching 1.3250, supported by expectations of a US Federal Reserve rate cut. Meanwhile, the EUR/USD remained steady around 1.1600 amid subdued trading conditions, with dollar pressure maintaining the Euro’s position.
Gold experienced some upward movement, reflecting dovish Federal Reserve expectations, although a risk-on mood limited potential gains. Crypto exchange Upbit faced a $37 million loss from a Solana wallet breach, halting transactions to manage the incident.
With US markets closed for Thanksgiving, the UK and European stock indices have drifted mostly lower. The Budget’s aftermath remains a point of interest, as well as growing market breadth. Ripple’s recovery attempts were hindered by resistance points despite regulatory progress in the UAE.
Us Federal Reserve Rate Cut Expectations
The Japanese jobs-to-applicants ratio has cooled to 1.18, falling short of expectations and marking a significant slide from the 1.29 level seen two years ago in late 2023. This weaker labor market data reinforces our view that the Bank of Japan will maintain its ultra-loose monetary policy. Consequently, we see continued downside pressure on the Yen, making call options on pairs like USD/JPY attractive.
Growing conviction of a Federal Reserve rate cut is the dominant market theme right now, pressuring the US Dollar across the board. Current market pricing, reflected in Fed funds futures, now implies over an 85% probability of a 25-basis-point cut at the December 2025 FOMC meeting. This makes selling Dollar Index (DXY) futures or buying protective put options on the dollar a primary strategy for the coming weeks.
Sterling continues to be a clear beneficiary of the weak dollar, with GBP/USD pushing towards the 1.3250 level. Unlike the Fed, the Bank of England faces persistent core inflation, which we saw hovering near 3.5% in the latest UK CPI report, limiting its ability to pivot dovishly. Traders should consider buying near-term call options on GBP/USD to capitalize on this policy divergence.
Gold is gaining support from the prospect of lower US interest rates, which reduces the opportunity cost of holding the non-yielding asset. While a risk-on sentiment has capped the rally, we believe the fundamental driver of a dovish Fed will ultimately push prices higher from the current $2,250/oz level. We recommend buying call options to position for a break above recent resistance, as a Fed cut would likely be the catalyst.
