The UK’s M4 money supply rose from 3.5% in October to 4.3% in November. This increase shows changes in liquidity within the economy, which could affect future monetary policy decisions. Gold prices remain above $4,400, driven by geopolitical tensions, particularly from Venezuela. This precious metal provides a stable investment option during uncertain times.

Market Sentiment

The GBP/JPY pair has not changed much, with support for the yen following comments from the Bank of Japan (BOJ). Overall, market sentiment is cautious due to various geopolitical influences. The USD/CHF pair benefits from safe-haven flows, responding to weaker economic data from Switzerland. Investors looking for stability are focusing on the Swiss franc. Federal Reserve Bank of Minneapolis President Neel Kashkari expressed concerns about inflation. This indicates that monetary policy will face ongoing challenges. The December ISM Manufacturing PMI is expected to show further contraction in US factory activity, serving as an important indicator of the manufacturing sector’s health.

Advanced Economies in 2026

Forecasts suggest that advanced economies may perform stronger in 2026, building on projected resilience in 2025. Meme coins like Dogecoin, Shiba Inu, and Pepe have seen price increases, driven by events in Venezuela. FXStreet has released a list of top forex brokers, preparing for opportunity-driven markets in 2026. Traders should stay alert to changing market dynamics. In summary, the economic landscape is influenced by geopolitical events, monetary policy, and emerging market trends. Staying informed is crucial as new developments emerge. We are observing mixed signals that hint at rising market volatility in the weeks ahead. The Federal Reserve is concerned about inflation, while key data such as the US factory activity index points to a slowdown. This conflict between a hawkish Fed and a softening economy creates uncertainty. In the UK, the rise in M4 money supply to 4.3% is notable. This increase in liquidity, occurring when the UK’s CPI was around 3.1% in late 2025, pressures the Bank of England to uphold its tight monetary policy. We should expect ongoing volatility in GBP currency pairs and explore options for trading potential shifts in UK interest rate expectations. The US ISM Manufacturing PMI is likely to confirm ongoing contraction, as readings in 2025 have consistently been below the 50-point mark separating growth from decline. The December figure of 48.2 indicates the 14th consecutive month of contraction in the sector. This strain in the industrial economy sharply contrasts with the Fed’s belief that inflation, last recorded at 3.4% in November, remains too high. Geopolitical risks, especially regarding Venezuela, are causing substantial safe-haven flows into assets like gold and the US dollar. Gold has surged over $4,400, bolstered by central bank purchases exceeding 950 metric tons during 2025. This shift towards safer assets also supports the USD/CHF pair, particularly as Swiss economic data has recently fallen short of expectations. These safe-haven movements are creating speculative opportunities, as seen in the increase of meme coins. While the GBP/JPY pair is stable, the tension from a hawkish Bank of England and a potentially interventionist Bank of Japan could lead to sudden market changes. Traders in derivatives should prepare for quick spikes in volatility across various asset classes in this fragile environment. Create your live VT Markets account and start trading now.

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