GBP/USD Rises, Euro/USD Holds Steady

The GBP/USD has risen close to 1.3250, boosted by expectations that the US Federal Reserve will cut interest rates. In contrast, the EUR/USD remains stable around 1.1600, under mild trading conditions, with pressure on the dollar supporting the Euro’s position. Gold saw a slight increase, driven by hopes for a dovish Federal Reserve, although a positive market mood limited its gains. In crypto news, the exchange Upbit suffered a $37 million loss due to a breach of a Solana wallet, leading to a pause in transactions to address the issue. With US markets closed for Thanksgiving, UK and European stock indices mostly dipped lower. The aftermath of the UK Budget continues to attract attention, as does the increasing market breadth. Ripple’s attempts to recover faced challenges from resistance levels, despite some regulatory progress in the UAE.

Expectations for a US Federal Reserve Rate Cut

Japan’s jobs-to-applicants ratio has dropped to 1.18, below expectations and down from 1.29 two years ago. This weaker labor market data suggests that the Bank of Japan will stick with its very loose monetary policy. As a result, we anticipate continued downward pressure on the Yen, making call options on pairs like USD/JPY appealing. Market consensus is leaning towards a Federal Reserve rate cut, affecting the US Dollar negatively. Current market pricing indicates over an 85% chance of a 25-basis-point cut at the December 2025 FOMC meeting. Thus, selling Dollar Index (DXY) futures or purchasing protective put options on the dollar is a key strategy for the weeks ahead. The Sterling is benefiting from the weaker dollar, with GBP/USD approaching 1.3250. Unlike the Fed, the Bank of England is dealing with persistent core inflation, around 3.5% as seen in the latest UK CPI report, which limits its ability to shift to a dovish stance. Traders may want to consider buying near-term call options on GBP/USD to take advantage of this policy difference. Gold is getting support from the potential for lower US interest rates, which makes holding the non-yielding asset less costly. Although positive market sentiment has capped the rally, we believe that the anticipated dovish Fed will drive prices higher from the current level of $2,250/oz. We suggest buying call options to prepare for a breakout above recent resistance, as a Fed rate cut could serve as a major catalyst. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now