GBP/USD falls to near 1.2300 as traders adopt caution ahead of Trump’s economic policies
GBP/USD loses ground after registering more than 1% gains in the previous session, trading around 1.2300 during the Asian hours on Tuesday. The pair faced challenges as the US Dollar (USD) regained ground after recent losses in the previous session, supported by news that President Donald Trump intends to direct federal agencies to review tariff policies and evaluate the United States’ trade relationships with Canada, Mexico, and China.
The US Dollar Index (DXY), which tracks the performance of the US Dollar against six major currencies, trades around 108.30 after trimming recent gains. The US Dollar receives downward pressure as the US Treasury yields on 2-year and 10-year bonds remain subdued at 4.23% and 4.54%, respectively, at the time of writing. Read more…
GBP/USD gains ground ahead of UK labor figures
GBP/USD rose 1.35% on Monday, gaining ground and climbing back over the 1.2300 handle as markets breathe a collective sigh of relief after freshly-minted US President Donald Trump made a last-minute pivot away from a broad, sweeping policy of day-one trade tariffs. Back for a second term, Donald Trump is still actively pursuing a policy of reviewing trade circumstances with most of the US’ strongest allies in trade terms, however the returning president has already begun waffling on his campaign promises to use executive orders to apply tariffs of at least 20% across the board, with a 65% import tariff threatened against China specifically.
UK Claimant Count change figures are expected to climb 10.3K in December, a sharp uptick from the previous month’s 0.3K print. However the UK’s ILO Unemployment Rate for the three months ended in November is still expected to hold steady at 4.3%. Read more…
New Zealand Dollar (NZD) is likely to trade sideways between 0.5560 and 0.5610. In the longer run, upward momentum has largely faded; NZD is expected to trade in a 0.5540/0.5650 range, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.
NZD to trade in a 0.5540/0.5650 range
24-HOUR VIEW: “Our view for NZD to ‘trade in a sideways range between 0.5580 and 0.5630’ last Friday was incorrect, as it dropped to a low of 0.5564 before closing at 0.5585 (-0.41%). The decline did not result in a significant increase in momentum, and instead of continuing to decline, NZD is more likely to trade sideways between 0.5560 and 0.5610.”
1-3 WEEKS VIEW: “While we noted ‘a slight increase in momentum’ last Thursday (15 Jan, spot at 0.5620), we pointed out that it ‘must break and remain above 0.5650 before a move to 0.5695 is likely.’ We added, ‘the likelihood of NZD breaking clearly above 0.5650 will remain intact, provided that it remains above 0.5580 (‘strong support’ level).’ Last Friday, NZD fell below 0.5580 (low has been 0.5564). Upward momentum has largely faded, and from here, we expect NZD to trade in a 0.5540/0.5650 range.”
GBP/USD Weekly Outlook: US President Trump means fresh challenges for Pound Sterling
The Pound Sterling (GBP) paused its downtrend against the US Dollar (USD), fuelling a tepid GBP/USD recovery from 14-month lows of 1.2100.
This week, it was all about the inflation data from the United Kingdom (UK) and the United States (US). However, the US inflation data-led renewed dovish expectations surrounding the Federal Reserve (Fed) fuelled a sustained correction in the USD and the US Treasury bond yields from over one-year highs. The broad US Dollar softness allowed the GBP/USD pair to sigh relief after hitting a fresh 14-month low at 1.2100 to begin the week. Read more…
GBP/USD ticks higher on softer USD; lacks bullish conviction and remains below 1.2200
The GBP/USD pair kicks off the new week on a slightly positive note and reverses a part of Friday’s decline, though the uptick lacks follow-through or bullish conviction. Spot prices currently trade around the 1.2180 region, up less than 0.10% for the day, and remain close to the lowest level since November 2023 touched last week.
The US Dollar (USD) struggles to capitalize on Friday’s positive move amid expectations that the Federal Reserve (Fed) may not exclude the possibility of rate cuts by the end of this year. Apart from this, a generally positive risk tone undermines demand for the safe-haven Greenback, which is seen lending some support to the GBP/USD pair. That said, a combination of factors could act as a headwind for spot prices, warranting some caution for bullish traders. Read more…
Gold slightly down in late trading, still up 0.40% for the week amid geopolitical tensions.
Mixed US economic data; higher Housing Starts, lower Building Permits minimally impact Bullion.
Fed Governor Waller’s dovish comments suggest potential for early rate cuts.
Gold’s price dropped late in the North American session, but it is set to finish the week with gains of over 0.40% as market players await the inauguration of US President-elect Donald Trump. Although the XAU/USD trades at $2,701, down 0.44%, investors continued to buy the golden metal due to political uncertainty.
The precious metal continues to be driven by geopolitics and politics in the United States (US). Although US Treasury bond yields in the belly of the curve remained unchanged, Bullion buyers failed to push prices higher to book additional gains ahead of the weekend.
The US economic schedule showed that Housing Starts jumped double digits, though Building Permits contracted in December. Gold barely reacted to the news, as most of the data revealed during the week, led by Retail Sales featured on Thursday, suggest the economy is solid.
The US Dollar Index (DXY), which tracks the USD’s performance against a basket of six peers, surged 0.35% to 109.34.
Other data revealed during the Asian session showed that China’s economy hit a 5% Gross Domestic Product (GDP) growth rate in 2024, according to the National Bureau of Statistics.
On Thursday, Fed Governor Christopher Waller tilted dovish and commented that the US central bank could lower borrowing costs sooner and faster if the disinflation process evolves.
Market participants are pricing in near-even odds that the Fed will cut rates twice by the end of 2025 and see the first reduction in June.
Next week, the US economic docket will feature the US Presidential Inauguration, the release of Initial Jobless Claims and Flash PMIs data.
Daily digest market movers: Gold price pressured ahead of the weekend
Gold fell as real yields remained firm on Friday. Measured by the 10-year Treasury Inflation-Protected Securities (TIPS) yield, was virtually unchanged at 2.18%.
The US 10-year Treasury bond yield was unchanged at 4.618%, a headwind for the golden metal.
US Housing Starts jumped from 1.294 million to 1.499 million in December, a jump of 15.8% MoM.
Building Permits for the same period shrank as permits dipped from 1.493 million to 1.483 million, a 0.7% drop.
The latest inflation data and Fed Waller’s comments pressured the US Dollar, as traders had grown confident the Fed would cut rates sooner rather than later. Waller didn’t rule out a cut in the March meeting as inflation “is getting close to what our 2% inflation target would be.”
XAU/USD technical outlook: Gold hold firm near $2,700
Gold prices fell amid the lack of catalysts ahead of the weekend. Nonetheless, buyers must keep XAU/USD’s prices above $2,700, so they can remain hopeful of pushing the yellow metal toward the December 12 high of $2,726. Once surpassed, the next stop would be $2,750, followed by the all-time high at $2,790.
On the other hand, buyers’ failure to achieve the previously mentioned outcome could mean Gold might test the January 13 swing low of $2,656, followed by the confluence of the 50 and 100-day Simple Moving Averages (SMAs) at $2,639 – $2,642.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Pound Sterling tumbles as decline in UK Retail Sales sets stage for BoE rate cuts
GBP/USD Price Forecast: Remains below 1.2250 barrier near nine-day EMA
GBP/USD snaps two-day win streak, UK Retail Sales in the pipe
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Slight increase in upward momentum is likely to lead to a higher trading range of 0.6170/0.6215. Australian Dollar (AUD) is expected to trade in a range, probably between 0.6130 and 0.6240, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.
Slight increase in upward momentum
24-HOUR VIEW: “Yesterday, we noted that the outlook for AUD ‘is mixed.’ We were of the view that it ‘may trade in a range, probably between 0.6140 and 0.6205.’ AUD traded in a narrower range than expected (0.6167/0.6207), closing higher by 0.31% at 0.6195. There has been a slight increase in upward momentum. However, this will likely lead to a higher trading range of 0.6170/0.6215 instead of a sustained advance.”
1-3 WEEKS VIEW: “We highlighted yesterday (14 Jan, spot at 0.6180) that ‘the buildup in downward momentum is fading quickly, and if AUD were to break above 0.6205 (‘strong resistance’ level), it would mean it is likely to trade in a range instead of declining to 0.6100.’ Our ‘strong resistance’ level was slightly breached as AUD rose to a high of 0.6207. From here, we expect AUD to trade in a range, probably between 0.6140 and 0.6240.”
The GBP/USD plunged below 1.2200 during the North American session following the release of US producer price inflation data, which hinted that prices dipped slightly but close to Wall Street’s estimates.
Gold recovers from post-labor report drop as investors weigh Fed’s cautious disinflation stance.
Upcoming US inflation and retail sales data set to influence gold’s trajectory, Fed policy.
Gold price rebounded off daily lows on Friday, extending its rally for the fourth consecutive day as traders shrugged off a strong United States (US) Nonfarm Payrolls report. This tempered the Federal Reserve’s (Fed) concerns about the labor market, but not so much inflation as some officials acknowledged. The XAU/USD trades at $2,687, up 0.69%.
Bullion fell sharply after the US Bureau of Labor Statistics (BLS) revealed that the economy added an outstanding number of people to the workforce, topping 200K. As a consequence, the Unemployment Rate dipped, while investors priced in fewer interest rate cuts based on the fact that the economy continues to create enough jobs, while the disinflation process “halted,” according to the Fed’s latest minutes.
Nevertheless, XAU/USD recovered once market participants digested the data. The data reassured Fed officials that the labor market remains healthy while they tackle inflation, which recently edged higher after the US central bank lowered rates by 100 basis points in 2024.
The US Dollar rose sharply to multi-month highs according to the US Dollar Index (DXY). The DXY hit 109.96 before trimming gains and is at 109.68, up 0.49%. US Treasury bond yields soared, yet had stabilized, particularly the belly of the curve.
Chicago Fed President Austan Goolsbee said they don’t complain because the economy has created over 250K jobs. He added that the jobs market seems stable “at full employment,” adding that if conditions are stable and there’s no rise in inflation, “rates should go down.”
Given the backdrop, investor focus will shift to next week’s data. The US schedule will feature inflation figures on the producer and consumer side, alongside Retail Sales and jobless claims for the week ending January 11.
Daily digest market movers: Gold price surges accompanied by the US Dollar
Gold price shrugs off higher US real yields, which rose by two bps to 2.30%. At the same time, the US 10-year T-note yield soared seven and a half bps to 4.767%.
The US Bureau of Labor Statistics (BLS) revealed that the economy created 256K jobs last month, although November was revised downward from 227K to 212K. The consensus projected 160K people to be added to the workforce, with private hiring totaling 223K.
The Unemployment Rate fell to 4.1%, while Average Hourly Earnings (AHE) dipped from 4% to 3.9%. Following the data release, traders expect the Federal Reserve to cut rates just once in 2025.
Easing expectations of the Federal Reserve continued to edge lower. The December Fed funds futures contract is pricing in 30 basis points of easing.
US Consumer Sentiment in January announced by the University of Michigan (UoM) missed estimates of 73.8 and was down to 73.2. Inflation expectations for one year rose by 3.3% up from 2.8% and for a five-year period increased from 3% to 3.3%.
On Thursday, Fed Governor Michelle Bowman maintained a hawkish stance, saying the central bank should be cautious in adjusting interest rates, while Kansas City Fed Jeffrey Schmid added that rates are “near” neutral.
Earlier, Philadelphia Fed Patrick Harker revealed that the US central bank could pause amid uncertainty, while Boston Fed Susan Collins said the current outlook suggests a gradual approach to rate cuts.
XAU/USD technical outlook: Gold price soars above $2,650 as bulls stepped in
Gold’s uptrend remains in place as the yellow metal has carved successive series of higher highs and higher lows, with traders eyeing the $2,700 mark. Momentum is strongly tilted to the upside as seen on the Relative Strength Index (RSI) indicator, which shows bulls are in charge.
If XAU/USD clears $2,700, the next resistance would be the December 12 high of $2,726 and the all-time high (ATH) at $2,790.
Conversely, a drop below $2,650 will put into play a challenge of the 50 and 100-day Simple Moving Averages (SMAs) at $2,645 and $2,632 respectively. On further weakness, $2,600 is up next, ahead of the 200-day SMA at $2,503.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Scope for US Dollar (USD) to test 158.50; a breach above this level is not ruled out, but any further advance is highly unlikely to reach 159.00. In the longer run, USD is expected to trade with an upward bias against the Japanese Yen (JPY); any advance is expected to face significant resistance at 159.00, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.
Any advance is expected to face significant resistance at 159.00
24-HOUR VIEW: “When USD was trading at 158.15 yesterday, we indicated that it ‘could rise, but it does not appear to have enough momentum to reach 159.00 (there is another resistance level at 158.50).’ USD subsequently rose less than expected, reaching a high of 158.42. It then closed at 158.02, higher by 0.27%. While there has been no significant increase in upward momentum, there is scope for USD to test 158.50. A break of this level this not ruled, but any further advance is highly unlikely to reach the major resistance at 159.00. On the downside, a breach of 157.30 (minor support is at 157.70) would mean that USD is more likely to trade in a range instead of testing 158.50.”
1-3 WEEKS VIEW: “There is not much to add to our update from yesterday (07 Jan, spot at 158.15). As highlighted, ‘upward momentum is building, and we expect USD to trade with an upward bias.’ We also highlighted that, ‘any advance is expected to face significant resistance at 159.00.’ We continue to hold the same view provided that 156.80 (no change in ‘strong support level) is not breached.”
Gold climbs to $2,664 but faces pressure from a strong US labor market and Trump’s assertive tariff plans.
Trump’s unexpected remarks on reclaiming the Panama Canal and imposing tariffs on neighbors bolster the US Dollar.
People’s Bank of China boosts gold reserves, signaling increased demand as global economic uncertainties persist.
Gold price advanced late in the North American session on Tuesday yet retreated from daily highs on solid United States (US) economic data and US President-elect Donald Trump’s press conference remarks. The XAU/USD trades at $2,648, gains 0.50%.
In the United States, the schedule revealed a strong jobs report amid an increase in job openings, reassuring investors that the labor market is solid. Furthermore, business activity in the services sector improved sharply, weighing on expectations for further easing by the Federal Reserve (Fed).
In the meantime, US President-elect Donald Trump crossed the wires, said he would like to take back control of the Panama Canal and reiterated that he would impose tariffs on Canada and Mexico. This boosted the US Dollar (USD) and capped Gold’s advance.
Earlier, Bullion rose to a two-day peak of $2,664 after China’s central bank increased its Gold reserves for the second straight month by 300K ounces to 73.3 million, an indication that the People’s Bank of China (PBoC) resumed its purchases after a six-month pause.
US Treasury bond yields remained high, bolstering the Greenback. According to the Fed funds futures interest rate contract at the Chicago Board of Trade (CBOT), investors estimate 51 basis points (bps) of easing or two 25 bps interest rate cuts by the Fed toward the end of the year.
Ahead this week, the US economic docket will feature the ADP Employment Change, Initial Jobless Claims figures, the Fed’s last meeting minutes and December’s US Nonfarm Payrolls report.
Daily digest market movers: Gold price climbs amid high US yields, underpinned by PBoC purchases
Gold remains pressured as US real yields rise two bps up to 2.28%.
The US 10-year T-note yield soars six and a half bps to 4.691%.
The US Dollar Index (DXY), which tracks the buck’s performance against a basket of six currencies, edges up by 0.26% at 108.55 after bouncing from a weekly low of 107.75.
The ISM Services PMI in December increased by 54.1, exceeding forecasts of 53.3 and November’s 52.1 reading.
The Job Labor and Turnover Survey (JOLTS) revealed that work openings increased from 7.839 million to 8.098 million in November.
The US trade deficit widened in November, according to the US BEA, reaching $78.2 billion compared to $73.6 billion in October.
Imports climbed by 3.4% MoM to $351.6 billion from $339.9 billion, while exports increased by 2.7%MoM to $273.4 billion from $266.3 billion.
XAU/USD technical outlook: Gold price advances but remains below $2,650
Gold prices have advanced above $2,640, opening the door to exchange hands at around the $2,640 – $2,650 range. Nonetheless, the yellow metal cannot decisively clear the 50-day Simple Moving Average (SMA) at around $2,651, which could pave the way for further upside.
In that outcome, the next ceiling level would be $2,700 ahead of challenging the December 12 peak at $2,726. If surpassed, the next stop would be the record high at $2,790.
Conversely, if sellers drag the XAU/USD below the 100-day SMA of $2,627, look for a test of $2,500 before Gold extends its losses to the 200-day SMA at $2,494.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
EUR/USD inches lower to 1.0370 on Tuesday after repeated rejections at the 20-day SMA.
The RSI rises to 45, suggesting improving momentum but still hinting at a cautious outlook.
MACD shows flat green bars, indicating easing bearish pressure yet no clear bullish shift.
EUR/USD managed to climb towards the 1.0370-1.0390 area at the begging of the year, continuing its fragile attempt to recover from recent losses. Despite this uptick, the pair has repeatedly struggled to decisively break above the 20-day Simple Moving Average (SMA) since the start of 2025, reinforcing the notion that sellers may still dictate the short-term direction.
Technical readings are mixed. While the Relative Strength Index (RSI) has lately improved to 45 suggesting a modest pickup in buying interest but it remains in negative territory, indicating that buyers are not yet fully in control. Meanwhile, the Moving Average Convergence Divergence (MACD) histogram prints flat green bars, implying that bearish momentum is easing but hasn’t given way to a sustained bullish push.
Looking ahead, a solid move above the 20-day SMA would be necessary to establish a more convincing recovery and open the door for further gains. Absent that, the pair remains vulnerable to renewed selling pressure, keeping its recent bounce on cautious footing.
