The UK’s Index of Services held steady at 0.4% over the three months leading to August. During this time, the UK GDP rose by 0.1%, which met initial expectations.

Manufacturing In The UK

In August, UK Manufacturing Production exceeded predictions, helping to support the Pound Sterling as the US Dollar continued to recover. In financial markets, the EUR/USD stayed above 1.1650 as traders awaited central bank meetings. Gold remained strong, trading close to an all-time high due to economic worries, including a potential US government shutdown and ongoing US-China trade issues. Meanwhile, Dogecoin stabilized around $0.19, noted a 5% drop this week, but on-chain data suggested it might recover soon. After a 2.7% drop, the S&P 500 showed an “inside day” pattern, indicating market uncertainty despite some recent recoveries. This raises questions for traders about the right time to re-enter the market. This financial information is for educational purposes only. Invest wisely, as all investments have risks. Conduct thorough research before making decisions. The views shared do not necessarily represent FXStreet’s official stance or that of its advertisers. With the UK Index of Services showing no growth, the economy appears stagnant. This follows the technical recession at the end of 2023, indicating any recovery has been quite weak. Derivative traders should think about using protective put options on the FTSE 100, as negative data could easily push the index lower.

Central Bank Divergence

We need to pay attention to the differing directions of central banks. The European Central Bank is indicating it’s nearing the end of its rate-cutting cycle, which started in mid-2024. This hints at a stronger Euro. On the other hand, ongoing concerns about US growth are leading to expectations for more cuts from the Federal Reserve, which supports the EUR/USD staying above 1.1650. Uncertainty is high in the US stock markets, evident in the S&P 500’s unpredictable trading patterns. Tensions from the upcoming 2024 election and ongoing trade disputes have kept the CBOE Volatility Index (VIX) around 19, significantly above its average. This environment favors traders using options strategies like straddles to profit from anticipated price fluctuations. The search for safety is pushing gold prices toward their all-time high of $2,500 an ounce. This trend is fueled by consistent gold purchases by central banks, which hit record levels in 2024 and continue into 2025. Buying call options on gold futures seems like a smart move to take advantage of this rising trend. Despite weak domestic data, the British Pound remains strong above 1.3400 against the US Dollar, showing resilience. In Australia, rising unemployment hasn’t yet forced the Reserve Bank of Australia to cut rates, which supports the Aussie dollar. This situation makes currency pairs like AUD/JPY appealing, especially as it approaches 98.50. Create your live VT Markets account and start trading now.

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