GBP/USD experienced a slight increase on Tuesday, positioning Cable near the high end of recent consolidation and around the 200-day Exponential Moving Average (EMA). US consumer sentiment fell in February, raising concerns about economic slowdown, and President Trump reiterated his plans to impose import taxes.

Despite the decline in consumer sentiment, GBP/USD maintained an upward trend, as the market anticipates that Trump may postpone his tariff decisions. Limited data releases are expected from both the US and UK this week, with attention turning to Thursday’s US Gross Domestic Product (GDP) figures.

Tuesday’s activity saw GBP/USD stabilised around the 1.2680 level, following a recovery of 4.7% from January’s low near 1.2100. The GBP remains under pressure due to a technical ceiling just below the 1.2700 mark.

The Pound Sterling is the UK’s official currency, issued by the Bank of England (BoE), with monetary policy its key driver. Economic indicators such as GDP and employment statistics can significantly affect the Pound’s value.

The Trade Balance also plays a role, with a positive balance strengthening the currency while a negative one can lead to depreciation.

This recent uptick in Cable places it in a decisive zone, testing resistance while finding support near the long-term moving average. The price action largely reflects mixed sentiment, where optimism surrounding a potential delay in import duties outweighs weakening consumer confidence. However, with external factors like sentiment readings taking a hit, traders should tread carefully, as market movements may be more reactive to policy developments than fundamental data in the short term.

Given the lack of major data releases from both sides of the Atlantic, movement in the coming sessions is likely to be dictated by broader market risk appetite and positioning ahead of Thursday’s GDP figures. If the US economy shows stronger-than-expected growth, the next test for Cable will be whether it can sustain momentum against a firmer dollar. Conversely, if growth disappoints, we could see further attempts to push beyond 1.2700, though prior rejections from this level suggest that upward traction might be met with hesitation.

Since early January, Sterling has posted an impressive recovery, but losing steam at these levels suggests that traders are wary of chasing the rally much further without additional catalysts. It remains constrained by key resistance zones, and without fresh momentum, a pullback in the direction of short-term support levels could be on the cards. Should traders see a rejection here, attention may shift towards technical markers lower down in the range.

Broader macroeconomic trends continue to dictate movements in the Pound. The BoE’s policy stance remains a key influence, while economic releases such as employment figures, inflation data, and retail performance contribute to shifts in sentiment. Trade balance dynamics add another layer of complexity, with currency strength often reflecting demand for UK goods and services. A strengthening surplus can provide support, while persistent deficits bring downside risks.

With these factors in mind, the next few sessions will reveal whether buyers remain committed near current levels. If resistance gives way, the technical outlook would brighten, but hesitation around 1.2700 suggests that market participants may need further validation before pushing much higher. Should price struggle to clear these headwinds, focus could turn back towards the lower range of recent consolidation as traders reassess positioning.

The Trump administration is set to establish a registry for undocumented immigrants in the United States. Immigrants aged 14 and older must submit their fingerprints and home addresses or risk fines up to $5,000 and imprisonment of up to six months.

This initiative aims to criminalise the status of being in the U.S. illegally, further enforcing stricter immigration laws. The potential outcome for U.S. labour markets may be a decrease in low-cost labour, which could contribute to rising inflation.

If implemented as outlined, this policy would change employment patterns, especially in industries dependent on a steady supply of undocumented workers. Sectors like agriculture, construction, and hospitality often rely on these labourers to fill roles that citizens and legal residents may be less inclined to take. A sudden contraction in available workers could drive wages higher as businesses adjust to a smaller labour pool. Increased labour costs could then translate to rising consumer prices, reinforcing inflationary pressures already present in the economy.

Markets react to inflation in measurable ways. A sustained upward trend in prices often prompts shifts in monetary policy. If inflation accelerates beyond current projections, the Federal Reserve may feel compelled to adjust interest rates accordingly. Investors tend to anticipate these decisions, affecting bond yields and currency fluctuations ahead of formal announcements. Traders need to remain mindful of how pricing pressures filter through economic data releases in the coming weeks, particularly in employment figures and consumer spending trends.

Beyond domestic implications, tighter immigration enforcement may also impact cross-border financial flows. If deportations increase or undocumented workers exit voluntarily, remittances sent to countries reliant on U.S. earnings could decline. This reduction in money transfers would affect nations where these funds constitute a sizeable portion of GDP. Currency markets often reflect such shifts, especially for economies closely tied to remittance inflows.

Policy uncertainty often fuels volatility. Market participants have already witnessed abrupt changes in direction in response to legislative decisions. This latest measure introduces another variable into an already complex set of considerations. Statements from officials in the coming weeks could further influence expectations, making it essential to watch for additional guidance on enforcement timelines and exemptions.

For those monitoring price action in derivatives, labour market trends and inflation signals should not be overlooked. If wages climb and consumer prices follow, asset pricing adjustments will occur. Every inflation report, jobs data release, and interest rate statement will offer clues as to whether these policy shifts are beginning to leave a deeper imprint.

Silver prices dropped over 1.80% on Tuesday, with a daily peak of $32.48 before falling below $32.00 due to risk aversion and profit-taking related to uncertainty about US trade policies. As Wednesday’s Asian session began, XAG/USD traded at $31.73.

The price reached a two-week low of $31.29 but rebounded near the 100-day Simple Moving Average of $31.20, which if breached, could lead to further declines towards $30. Buyers drove the price above $31.50, suggesting potential re-testing of the $32.00 level.

The Relative Strength Index (RSI) indicates a bearish momentum with a reading below 50, signalling a dominant selling pressure. Conversely, a rise above $32.00 could allow prices to revisit the February 25 high of $32.48, with the potential to challenge $33.00 if surpassed.

Silver is often seen as a store of value and medium of exchange, frequently traded to diversify portfolios. Factors influencing prices include geopolitical issues, recession fears, interest rates, and the strength of the US Dollar.

Industrial demand, particularly in sectors like electronics and solar energy, plays a significant role in price movements. Dynamics in major economies, especially in the US, China, and India, further contribute to fluctuations.

Silver generally follows Gold’s trends, reflecting their safe-haven asset characteristics. The Gold/Silver ratio can help gauge relative valuation, indicating whether Silver might be undervalued or Gold overvalued based on its level.

Investors should conduct thorough research and consider the associated risks when making investment decisions in these markets.

The recent drop in silver prices, losing more than 1.80% on Tuesday, reflects a shift in market sentiment. The metal peaked at $32.48 before slipping under $32.00, driven in part by growing risk aversion and traders securing profits amid uncertainty over US trade policies. As Wednesday’s session started in Asia, silver stood at $31.73 after briefly touching a two-week low of $31.29. Buyers intervened near the 100-day Simple Moving Average around $31.20, preventing a steeper decline towards the psychologically important $30.00 mark. The fact that prices rebounded above $31.50 suggests that retesting $32.00 in the short term is not off the table.

Momentum indicators show that sellers remain in control. The Relative Strength Index sits below the 50 threshold, a signal that bearish momentum continues to weigh on the market. However, if silver manages to reclaim and hold above $32.00, another move towards $32.48, last seen on 25 February, could follow. If that level gives way, $33.00 might come into focus, drawing in technical traders looking for breakout opportunities.

Beyond daily price moves, broader forces continue to shape silver’s medium-term direction. The metal remains an attractive asset both as a store of value and for its industrial applications. It is widely used in electronics and solar energy, sectors that have seen steady expansion in recent years. Fluctuations in demand from key economic players, especially the US, China, and India, add another layer of complexity to price movements.

Historical trends show that silver often moves in tandem with gold, as both metals share safe-haven characteristics. The relationship between the two can be tracked through the Gold/Silver ratio, which helps assess whether silver appears undervalued relative to gold or vice versa, offering traders another tool for decision-making.

Market participants need to carefully factor in external risks when navigating price swings. With ongoing geopolitical developments, economic uncertainty, and interest rate expectations all in play, volatility is likely to persist. No single element drives prices in isolation, so a broad perspective remains critical.

The Democratic Republic of Congo is considering cobalt export quotas to control oversupply and enhance prices. As the largest supplier of cobalt, the country faces challenges due to current prices being historically low.

This price drop is attributed to reduced demand from automakers and increased copper production, which is a by-product of cobalt extraction. While discussions over the implementation of these quotas are ongoing, no final decision has been reached. Sources close to the situation remain unnamed due to the sensitive nature of the discussions.

If these quotas are implemented, they could alter supply expectations in the weeks ahead. Traders keeping a close eye on cobalt prices will need to assess how this could impact availability.

With the Democratic Republic of Congo being the largest source of cobalt, any restriction on exports would tighten global supplies. Given that prices are already under pressure, changes in supply could affect future contracts. The link between cobalt extraction and copper production further complicates expectations. Since copper mining continues to expand, additional cobalt enters the market, despite softer demand. This dynamic has contributed to the current pricing difficulties.

Manufacturers, particularly those in the automotive sector, have adjusted procurement strategies in response to shifting battery technology and economic conditions. While this has led to lower immediate demand, it does not remove the possibility of stronger future consumption. What remains uncertain is how quickly purchasing patterns will change and whether price adjustments will follow.

Government discussions in the Democratic Republic of Congo suggest that officials are weighing multiple factors, including economic stability and their country’s role in global raw materials supply. Any decision to implement quotas will take these into account. Until a formal policy is announced, speculation around possible restrictions will continue to influence trading behaviour.

Some market participants may already be factoring in the potential impact of limitations on cobalt exports. If traders anticipate reductions in supply, they could adjust strategies to reflect tighter availability. On the other hand, if discussions do not lead to concrete action, the existing supply situation will persist, with prices shaped primarily by demand from automakers and broader industrial consumption.

With no official confirmation on quotas, the ongoing nature of these talks means short-term price movements may be driven by anticipation rather than concrete shifts in supply. Derivative traders following cobalt will want to monitor these developments closely, considering how they influence market positioning.

For now, the primary concern remains whether the Democratic Republic of Congo moves ahead with restrictions and, if so, how quickly they would take effect. Until a concrete decision is announced, price movements could reflect shifting expectations rather than actual supply changes.

The United States’ API reported a decrease in weekly crude oil stocks by 0.64 million barrels for the week ending February 21, down from a previous increase of 3.34 million barrels. This change indicates a shift in oil supply dynamics.

In currency trading, AUD/USD is trading below 0.6350 due to disappointing Australian economic data, which has raised expectations for a possible rate cut. Concurrently, USD/JPY is rebounding, nearing 149.50, driven by a stronger US Dollar and rising US Treasury yields following legislative developments.

Gold prices are fluctuating amid tariff uncertainties and weak US economic indicators, while digital currencies like Bitcoin, Ethereum, and Ripple have seen significant declines after a period of consolidation. Lastly, the week is expected to be influenced by political events inGermany and comments from US authorities regarding trade and inflation.

The latest oil inventory data shows a reduction in crude supplies, suggesting that prior stockpiling has eased. This shift could impact energy markets, particularly if further data reveals ongoing declines. Given that oil prices react swiftly to changes in available barrels, traders in linked contracts should monitor additional reports to determine whether this trend continues or was a one-off adjustment.

In foreign exchange, the Australian dollar is still struggling after economic releases failed to meet expectations. Markets now anticipate that policymakers could consider an interest rate reduction to support growth. With AUD/USD trading below 0.6350, those holding positions in this pair need to assess whether weakness may extend further or if an eventual rebound is likely. Meanwhile, the Japanese yen has weakened, pushing USD/JPY near 149.50. A stronger US dollar, fuelled by rising Treasury yields, has been the driving force. The movement follows recent legislative updates, which appear to have reinforced investor confidence in the dollar. This could continue influencing yen performance, especially if upcoming US reports further support the case for higher yields.

Gold is moving unpredictably as markets digest new trade developments. Uncertainty around tariffs and softer US economic figures have left traders weighing whether the metal will gain from safety-seeking flows or struggle amid shifting demand expectations. If additional economic weakness emerges, we might see renewed gold buying. Conversely, if fresh trade relief measures appear, the metal could face added selling pressure.

The digital asset market has faced losses after a period of stability. Bitcoin, Ethereum, and Ripple all moved lower, with sellers gaining control after days of limited change. This suggests that traders holding long positions must be cautious, as further weakness could emerge. However, given how rapidly sentiment shifts in the sector, those involved should stay attentive for any signs of renewed support.

For the remainder of the week, various economic and political stories may shape market movements. The situation in Germany could lead to additional currency fluctuations, while discussions in the US regarding trade and inflation may steer broader market sentiment. Anyone with exposure to these areas should remain focused, as fresh statements or decisions could quickly alter positioning opportunities.

US consumer confidence for February fell to 98.3, below the expected 102.5, dampening market sentiment and resulting in declines for risk assets. The Richmond Fed composite index rose to 6, contrasting last month’s -4.

Ukraine has agreed on a minerals deal with the US, with reports suggesting territorial concessions for peace. The Federal Reserve’s Barkin emphasised caution amid uncertainty in the inflation fight, while treasury auctions of $70 million in five-year notes yielded 4.123%.

Key market movements included gold down $35 to $2916, and WTI crude oil falling $1.60 to $69.10. The S&P 500 decreased by 0.5%.

Consumers are feeling less optimistic than expected, which often weakens demand for stocks and other risky investments. Businesses and investors pay attention to this because sentiment can shape spending and investment decisions. Since expectations were higher than reality, markets reacted by pulling back.

At the same time, manufacturing activity in the Richmond region is improving. A move from negative to positive suggests factories are seeing better conditions, which could point to broader economic stability in certain areas. However, one strong regional report does not mean overall growth is back on solid ground.

Meanwhile, Ukraine’s agreement with the US on minerals signals progress in negotiations, with some reports mentioning territorial discussions tied to a peace plan. If this leads to reduced geopolitical uncertainty, commodity markets and currencies linked to European stability may shift in response.

Federal Reserve policymakers remain focused on inflation. Tom Barkin’s remarks suggest officials are not rushing to make decisions, preferring to see more data before adjusting interest rates. This tone indicates a willingness to hold borrowing costs steady until there is more confidence in price stability.

Government debt auctions reflect investor expectations. A yield of 4.123% on the latest five-year note issuance means demand was healthy, but it also shows traders believe rates may stay elevated for a while. If inflation concerns persist, yields could rise further as investors demand better returns for holding bonds.

Precious metals faced pressure, with gold dropping $35 to $2,916. The decline suggests traders moved capital elsewhere, possibly into assets offering better short-term returns. Energy prices also weakened, with WTI crude oil slipping to $69.10. A fall like this often points to concerns about future demand or inventory levels.

Equities followed suit, with the S&P 500 slipping 0.5%. Lower consumer confidence, steady yields, and cautious Fed messaging likely contributed to the pullback in stocks. Investors are watching economic data points carefully, adjusting positions as they interpret incoming information.

The recent auction of the US 5-year note saw a decline in yield, dropping to 4.123% from the previous 4.33%. This indicates a shift in market conditions concerning government bonds.

In related market movements, the AUD/USD pair remains below 0.6350 due to disappointing Australian data, which is generating lowered expectations for a rate cut by the RBA.

Meanwhile, the USD/JPY pair has increased to nearly 149.50 amid rising US Treasury yields and the US House’s approval of the Republican Budget plan.

Gold prices are under pressure amid uncertainty around tariffs and weak economic outlooks in the US.

Additionally, Bitcoin’s price drop below $90,000 has caused a notable 11% decline in Strategy’s stock, raising concerns of potential forced liquidation.

Looking ahead, the focus of the week appears to centre on the aftermath of Germany’s elections and significant upcoming statements from US officials.

The drop in yield on the US 5-year note to 4.123% from its previous level of 4.33% suggests a change in expectations surrounding interest rates and investor sentiment towards government debt. When yields decrease, it often signals heightened demand for safer assets, possibly indicating that investors anticipate softer economic conditions or adjustments in monetary policy. Those involved in derivatives trading should take note of this shift, as it could affect risk appetite and broader movements in fixed-income markets.

Meanwhile, the Australian dollar remains under pressure, still struggling to move above the 0.6350 mark. The weaker-than-expected economic data from Australia has led to speculation that the Reserve Bank may not be as aggressive with rate hikes as previously thought. Lower expectations for a rate cut have contributed to a more cautious outlook for the currency. This could continue to weigh on sentiment in the near term, particularly if upcoming data fails to show improvement.

Across the Pacific, the Japanese yen continues to weaken, with the exchange rate approaching 149.50 against the US dollar. This movement has largely been driven by rising US Treasury yields, which tend to make the dollar more attractive relative to the yen. Additionally, the approval of a budget plan by lawmakers in Washington has supported the greenback, as it reduces uncertainty and reinforces confidence in government spending programmes. Those keeping an eye on yen-related trades should be aware that further weakness in the Japanese currency could prompt intervention or policy discussions from officials.

Elsewhere, gold prices remain subdued. Concerns over trade policies and a sluggish economic outlook in the US have added pressure to the precious metal. When uncertainty grows, gold typically finds support as a safe-haven asset, but at the moment, the market appears indecisive. Sentiment could shift quickly depending on any further developments in trade negotiations or updated economic projections.

Meanwhile, Bitcoin has dropped below $90,000, dragging Strategy’s stock down by 11% in the process. This decline has sparked worries about potential forced liquidations, particularly from leveraged positions. Sudden drops in price often trigger margin calls, increasing selling pressure and exacerbating volatility. If further downside occurs, traders will need to assess potential cascading effects across both digital and traditional assets.

As the week unfolds, much of the attention will remain on the aftermath of Germany’s elections, as well as a series of anticipated remarks from policymakers in the US. These statements could provide further clarity on interest rate expectations, inflation concerns, and broader market dynamics. Investors and traders will be watching closely for any cues that might influence positioning in the weeks ahead.

On 26 February 2025, Australia is set to release the monthly Consumer Price Index (CPI) data for January. Inflation is expected to rise from December, although it has generally shown a decline over the last six months, falling within the Reserve Bank of Australia’s (RBA) target range of 2-3%.

Factors such as government rebates have contributed to this downward trend, allowing the RBA to reduce the cash rate to 4.10% this month, marking its first cut since November 2020. Despite this easing, underlying inflation measures, like the Trimmed Mean Inflation, remain above the target, recorded at 3.2% in December 2024.

The monthly CPI, introduced in October 2022, offers more frequent insights into inflation trends but has limitations. It covers 62-70% of items in the quarterly CPI, excludes some categories, and is subject to revisions, which can lead to short-term volatility.

The upcoming release of January’s Consumer Price Index figures will provide fresh insight into how inflationary pressures are shaping up after months of gradual easing. While the overall direction has been downward, expectations of a slight uptick from December suggest that price pressures have not entirely disappeared. This could lead to short-term fluctuations in market sentiment, particularly as traders assess whether the Reserve Bank’s recent rate cut was well-timed or premature.

Government intervention, particularly through rebates, has played a part in lowering inflation, but these measures are temporary. With key underlying indicators, such as Trimmed Mean Inflation, still above the Reserve Bank’s preferred range, any indication that inflation is proving stickier than expected will prompt questions about the central bank’s ability to continue rate cuts in the coming months. The key focus will be on whether the latest figures reinforce the broader downward trajectory or raise doubts about how quickly inflation can return to the lower half of the target range.

There’s also the matter of how traders interpret the data’s reliability. Since the monthly CPI excludes some categories and covers fewer items than the quarterly measure, individual releases can sometimes mislead short-term positioning. Particularly with revisions possible, reacting aggressively to a single month’s data carries risks. However, ignoring a potential shift in inflationary pressures altogether could mean missing a turning point in market expectations for interest rates.

With interest rate decisions closely tied to inflation performance, the response in rates markets will indicate how confident traders are in further monetary easing. If the data points to a faster slowdown in prices, expectations for additional rate cuts will likely strengthen. If inflation remains stubborn, market pricing for future easing could weaken, forcing reassessments of short-term strategies.

Longer-term trends still favour disinflation, but interruptions in this downward momentum can influence short-term positioning. Each inflation print will be carefully weighed against broader policy expectations, particularly in the lead-up to the next central bank meeting. The degree to which markets react will depend not just on the headline number but also on whether underlying measures indicate persistent price pressures that could complicate future monetary policy decisions.

Federal Reserve Bank of Richmond President Thomas Barkin expects a decline in Personal Consumption Expenditure (PCE) inflation, attributing progress to the Federal Reserve’s efforts. He emphasised the need for a cautious approach due to ongoing policy uncertainty.

Barkin stated that policy should stay modestly restrictive until there is greater confidence that inflation will meet targets. He also mentioned the importance of monitoring how upcoming policy adjustments affect the economy, which he described as being in a good position.

Thomas sees inflation easing, largely crediting the central bank’s current stance. That said, he’s not in a rush to change course. He wants to keep things slightly on the restrictive side, at least until there is more certainty that inflation numbers will land where they should.

This signals something straightforward: rate cuts aren’t an immediate concern. The economy, according to him, is holding up well, and decision-makers need to carefully assess how future tweaks to policy ripple through markets. For traders, this means they’ll need to watch inflation data closely—adjustments won’t come from speculation alone.

Federal Reserve Governor Adriana Kugler appears to be thinking along the same lines but adds a layer of reassurance. She pointed out that inflation has eased while the job market has remained resilient. This suggests there’s less pressure to act aggressively in either direction. Put simply, she sees things moving the way they should, reinforcing the idea that the Fed is likely to stay patient.

Notably, John, who leads the Atlanta Fed, has also leaned into this viewpoint. While he acknowledges ongoing improvements, he’s still keeping an eye on inflation risks. If price pressures do flare up again, he isn’t ruling out keeping policy tight for longer than expected. But as long as inflation continues to cool, the door remains open for rate relief later on.

With these perspectives in mind, it’s clear that officials are maintaining a measured stance. Nothing here suggests an urgency to shift policy dramatically. Instead, they’re waiting for more confirmation that inflation won’t rebound before making any major changes.

For those trading derivatives, this means expectations around rate cuts should be managed carefully. A sudden shift in policy looks unlikely, but if inflation figures show sharper-than-expected movement, that could change. Every new data release will be a fresh test of sentiment.

In terms of employment, there’s little concern at the moment. The labour market hasn’t shown signs of troubling weakness, which means there’s no pressure for stimulus. That, too, points to a steady hand from policymakers rather than any rush to ease conditions.

Over the next few weeks, traders will need to weigh inflation readings, employment reports, and any signals from policymakers about whether their confidence in price stability is growing. Until then, assumptions about quick moves in interest rates should be tempered.

Peter Navarro, a trade advisor to Donald Trump, suggested the potential for additional tariff exemptions during a CNBC interview. His remarks contrasted with other Trump administration officials who view tariffs as a means to address budgetary shortfalls.

Discussions concerning tariffs on Canada and Mexico are still ongoing, with Navarro indicating that without progress, tariffs will be implemented. He also mentioned plans to impose reciprocal tariffs in response to digital services taxes.

In the financial markets, the Australian dollar remains weak due to disappointing economic data, while USD/JPY has rallied near 149.50. Meanwhile, gold prices have recovered slightly amidst trade war anxieties, and a notable decrease in Strategy stock was observed following a plunge in Bitcoin’s value.

Navarro’s statements suggest there may be room for manoeuvre regarding tariff exemptions, which could create uncertainty for those closely watching trade policies. While he appears open to expanding exemptions, others in the administration prioritise tariffs for revenue. This tug-of-war within the government could lead to market fluctuations, especially in industries that rely on stable trade policies.

Negotiations with Canada and Mexico are still unresolved, and Navarro has been clear that tariffs will be enforced if talks stall. This suggests that businesses operating between these countries should be prepared for potential cost increases. Additionally, the warning about reciprocal tariffs tied to digital services taxes means that companies involved in technology may face new hurdles. Any reaction in equity markets would depend on how these discussions unfold.

Currency markets have reflected broader economic pressures, particularly for the Australian dollar. Weak economic data has kept it under strain, limiting any upside moves. Against this backdrop, USD/JPY has edged higher, approaching 149.50, likely due to a combination of interest rate expectations and demand for the dollar. If rates continue to favour the US, this pair could maintain its upward momentum.

Gold has seen some recovery, spurred on by concerns over tariffs shaking investor sentiment. Traditionally seen as a hedge in uncertain times, gold may continue its upward climb if trade-related worries escalate. At the same time, the sharp drop in Bitcoin’s price has affected related stocks, with Strategy stock seeing a drop in response to the plunge.

For those managing derivative positions, anticipating policy shifts is key in the coming weeks. The uncertainties tied to trade talks and market sentiment will influence short-term moves. Staying alert to policy statements while tracking market reactions will be the best way to navigate these swings.