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The government shutdown impacted the Bureau of Labor Statistics' (BLS) data collection process during the month of October. Accordingly, the BLS is not reporting headline and core CPI inflation figures for that month, but they did report some sub-indices that are based on non-survey data. The BLS also noted that the November collection began on November 14^th and extended through the end of the month.

Headline CPI rose 2.7% year-on-year (y/y) in November, well below the consensus forecast of 3.1% and a deceleration from September's 3.0%.

• Energy prices firmed – rising 4.2% y/y from 2.9% in September – while food prices cooled to 2.6% y/y.

Core inflation registered 2.6% y/y (down from 3.0% y/y in September) and the softest reading since March 2021. November's print also came in well below the consensus forecast of 3.0% y/y. The three-month annualized rate of change slowed to just 1.6%.

Price pressures on services inflation cooled sharply, aided by a further easing in primary shelter costs (3.0% from 3.5% in September) and non-housing services (2.6% from 2.3%).

Meanwhile, goods prices unexpectedly slowed, with the three-month annualized rate dropping to 1.1% (from 2.9% in September).

Key Implications

Well, that was a surprise! Disinflationary pressure was evident across the board in November, with both goods and services inflation cooling. That said, we are hesitant to put too much stock in today's figures. The government shutdown delayed the collection of November's data, pushing the collection period into the holiday shopping season where there's traditionally deep discounting. Moreover, much of the decline in services was the result of a sharp slowing in primary shelter costs, suggesting we could see some giveback in the months ahead.

Chair Powell already warned that near-term data could suffer from distortions, suggesting Fed officials won't put too much emphasis on one month's data. That said, should inflation show further signs of cooling in the months ahead, it certainly raises the odds that the timing of further rate cuts is pulled forward, particularly if the labor market were to also show further signs of softening. Treasury yields across the curve fell several basis points following the release, with the 2-and-10-year yield dropping to 3.44% and 4.13%, respectively. Fed futures are nearly fully priced for another quarter-point cut by April.

This morning is a blessing for volatility traders and economists – A triple slate of high-tier change just landed in the past hour and a half.

Starting with the most recent releases, the US CPI (headline) for November landed at 2.7% vs 3.1% expectations – A sharp miss on high expectations and a very good sign for future cuts.

The Core measure actually came lower (2.6% vs 3% exp), reflecting a cooling in the Services sector.

Morning US Data releases – MarketPulse Economic Calendar

Dollar Lower, Stocks higher, bonds higher (meaning yields went lower) – Classic reaction.

Last year's inflation report was a relatively cool one, leading to a higher base effect.

This release is an even more encouraging report for the Fed, giving back some credibility to its dovish members (Hi Waller and Williams!).

By the way, Jobless Claims came slightly below expectations (224K vs 225K) – Nothing much to see here.

Market reactions to CPI 15M Charts for S&P 500, Oil, 10-Year Bonds, Gold, Bitcoin and the USD. December 18 – Source: TradingView

The Bank of England Cuts rates by 25 bps to 3.75% (Prior 4%) – Pound rallies

Bank of England's Statement – December 18 2025 Meeting. Source: Bank of England

The heavily expected cut was a hawkish one, with Governor Bailey indicating that future cuts will be close calls.

With UK inflation still above 3% and a cooling labor picture (but still growing), the margin of operation for the Bank of England is a small one.

The vote actually came at 5-4 for the 25 bps cut, indicating some dispersion in views and making future cuts even less obvious.

There is about 1.5 cuts priced in for 2026 for the UK Main Rate.

The next decision will be on February 6, 2026.

GBP/USD 1H Chart, December 18, 2025 – Source: TradingView

Cable is up about 700 pips after its hawkish cut and profiting even more from the miss in US CPI weighing on the USD.

Now reaching the 1.3440 to 1.35 Resistance and still evolving within an hourly Bull Channel, it will be interesting to see if there is much juice left to the current rally.

Watch the upwards channel and reaction to its highs (1.34850) if bulls manage to breach the Tuesday highs.

ECB keeps rates unchanged at 2% – Nothing new

The ECB has been a bit boring as of late.

Keeping rates unchanged, forward guidance is one indicating stable rates for the forthcoming times.

Still, the ECB pointed to sticky services inflation which it expects to see remaining high.

I encourage those who want to see more to check out this great review of the decision.

EUR/USD is forming a new range between 1.17 to 1.18 and isn't showing many signs of breaking out.

EUR/USD 2H Chart, December 18, 2025 – Source: TradingView

Safe Trades!

Market Overview

The crypto market capitalisation fell to $2.91T (-2.4% for the day). The surge at the start of the US session on Wednesday only fuelled the bears, who drove the market down to $2.89T by the end of the day, retreating only slightly from these lows. Under intense pressure, the major old altcoins — Ethereum, XRP, and Solana — retreated to multi-month lows, losing about 4% over the past 24 hours.

Bitcoin is trading near $87K, roughly where it was the day before. A sharp jump in price above $90K hit a wall of selling, and now just above this round level is a significant short-term resistance line, which was support until 14 December. However, it is also difficult for the market to find reasons to go below the $85K level, from which the price has been rebounding since the beginning of the week. Additionally, it is worth noting that BTC is trading significantly above its late November lows of $80K, outperforming major altcoins.

Solana’s price fell to $123, testing an important support area from March 2024. Since its peak in September, this seventh-largest altcoin has lost half of its value. The technical rebound that began at the end of November has ended, and if support at $120 fails, the road down to $90 or even $70 will open up.

News Background

Long-term Bitcoin holders have almost completed their active selling phase, according to K33 Research, which anticipates a decrease in selling pressure. Over the past two years, 20% of the supply has returned to the market, and this process is almost complete.

Institutional investors have begun buying Bitcoin at a rate faster than miners can mine it, Capriole notes. For the first time since November, demand from companies has exceeded the inflow of new coins into the market amid a more than 30% drop in the asset from its October highs.

Strategy bought 641 bitcoins daily in 2025, according to Finbold Research. This allowed it to increase its holdings by 223,800 BTC (a 50% increase) in less than a year.

The capacity of the Lightning Network (LN) micropayment network has reached a historic high, thanks to technical improvements and the implementation of the solution by major exchanges. The growth of this indicator is a sign of demand for faster and cheaper transactions.

Daily Pivots: (S1) 154.89; (P) 155.32; (R1) 156.12; More...

USD/JPY is still extending the corrective pattern from 157.88 and intraday bias stays neutral. On the upside, break of 156.94 will suggests that larger rally from 138.87 is resuming. Retest of 157.88 high should be seen and then 158.85 key structural resistance. On the downside, break of 154.33 will bring deeper correction to 55 D EMA (now at 153.90) and possibly below.

In the bigger picture, corrective pattern from 161.94 (2024 high) could have completed with three waves at 139.87. Larger up trend from 102.58 (2021 low) could be ready to resume through 161.94 high. Decisive break of 158.85 structural resistance will solidify this bullish case and target 161.94 for confirmation. On the downside, break of 150.90 resistance turned support will dampen this bullish view and extend the corrective range pattern with another falling leg.

Daily Pivots: (S1) 0.7932; (P) 0.7960; (R1) 0.7985; More…

Intraday bias in USD/CHF stays neutral as range trading continues. Overall, corrective pattern from 0.7828 is still extending. On the upside, break of 0.7990 support turned resistance will bring stronger rebound towards 0.8084. On the downside, below 0.7923 will target 0.7877 support.

In the bigger picture, outlook will stay bearish as long as 0.8332 support turned resistance holds (2023 low). Long term down trend from 1.0342 (2017 high) is still in progress. Next target is 100% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.7382.

Daily Pivots: (S1) 1.1710; (P) 1.1734; (R1) 1.1765; More….

Range trading continues in EUR/USD and intraday bias stays neutral. On the upside break of 1.1803 will resume the rally from 1.1467 to retest 1.1917 high. Decisive break there will resume larger up trend. On the downside, however, firm break of 55 D EMA (now at 1.1637) will turn bias back to the downside for 1.1467 support, to extend the corrective pattern form 1.19717 with another falling leg.

In the bigger picture, as long as 55 W EMA (now at 1.1373) holds, up trend from 0.9534 (2022 low) is still in favor to continue. Decisive break of 1.2 key psychological level will carry larger bullish implication. However, sustained trading below 55 W EMA will argue that rise from 0.9534 has completed as a three wave corrective bounce, and keep long term outlook bearish.

Daily Pivots: (S1) 1.3315; (P) 1.3372; (R1) 1.3431; More...

GBP/USD rebounds notably but stays below 1.3455 temporary top. Intraday bias remains neutral at this point. On the upside, above 1.3455 will resume the rebound from 1.3008. Firm break of 1.3470 resistance will pave the way to retest 1.3787 high. However, sustained break of 55 D EMA (now at 1.3295) will argue that the rebound has completed. Deeper fall would be seen back to 1.3008 support to resume the whole corrective pattern from 1.3787 high.

In the bigger picture, current development suggests that fall from 1.3787 is merely a corrective move, and larger rise from 1.0351 (2022 low) is still in progress. Firm break of 1.3787 will target 1.4248 (2021 high) key structural resistance. This will remain the favored case as long as target 38.2% retracement of 1.0351 to 1.3787 at 1.2474 holds, in case of another fall.

Sterling rallied broadly after the BoE delivered a widely expected rate cut that came with a distinctly hawkish undertone. The 5–4 vote, with four members dissenting in favor of holding rates steady, was a surprise and prompted a reassessment of how smooth the easing path ahead will be.

Fundamentally, the BoE still sees scope for further easing. However, policymakers were explicit that any additional cuts would now be a much “closer call”. That caution and the tight voting are striking given this week’s downside surprises in both UK employment and inflation. Despite the softer data, the MPC remains deeply divided.

February remains the most likely window for a follow-up cut, particularly with new economic projections due. Still, conviction has clearly faded, and markets are no longer confident that the BoE will simply return to a predictable quarterly easing rhythm.

By contrast, Dollar came under renewed pressure after US CPI undershot expectations. The weaker inflation print prompted a swift repricing of Fed expectations, with markets lifting the probability of a March rate cut to around 60%.

Even so, Dollar downside may not be linear. With risk sentiment fragile, further losses will likely depend on how equities behave through the rest of the session rather than on rate expectations alone. At the time of writing, US futures—particularly NASDAQ—are pointing to a rebound at the open. That recovery, however, remains tentative and vulnerable to reversal.

Looking ahead to Asia, attention turns to the BoJ, which is widely expected to raise rates by 25bps to 0.75%. That would mark the highest policy rate in 30 years, the first hike since January, and the first under Prime Minister Sanae Takaichi. The case for the move rests on persistently elevated core inflation and easing uncertainty tied to US tariffs, as confirmed by recent Tankan data. Political resistance to tightening has also softened.

Still, further tightening is far from assured. The BoJ is likely to wait for clearer evidence of sustained wage growth into 2026, with January’s economic projections set to shape expectations for what comes next.

In Europe, at the time of writing, FTSE is down -0.22%. DAX is up 0.40%. CAC is up 0.27%. UK 10-year yield is up 0.026 at 4.513. Germany 10-year yield is up 0.031 at 2.899. Earlier in Asia, Nikkei fell -1.03%. Hong Kong HSI rose 0.12%. China Shanghai SSE rose 0.16%. Singapore Strait Times fell -0.11%. Japan 10-year JGB yield fell -0.019 to 1.966.

US CPI slows sharply to 3.7% in November, core down to 2.6%

US inflation slowed more than expected in November, with the data compared against September levels due to the absence of October figures following the government shutdown.

Headline CPI eased from 3.0% yoy to 2.7%, undershooting expectations for a pickup to 3.1%. Core CPI also surprised to the downside, slowing from 3.0% yoy to 2.6% , well below forecasts for no change at 3.0%.

The broad-based moderation reinforces the view that underlying inflation pressures are easing faster than previously anticipated. Within the components, energy prices rose 4.2% yoy, while food prices increased 2.6% yoy.

US initial jobless claims fall back to 224k, match expectations

US initial jobless claims fell -13k to 224k in the week ending December 13, matched expectations. Four-week moving average of initial claims rose 500k to 217.5k.

Continuing claims rose 67k to 1897k in the week ending December 6. Four-week moving average of continuing claims fell -14k to 1902.

ECB holds rates, forecasts reinforce inflation convergence around target

The ECB left its deposit rate unchanged at 2.00%, in line with expectations, signaling continued confidence that current policy settings remain appropriate. With inflation broadly converging around target and growth improving, policymakers saw no need to adjust rates at this stage.

Updated Eurosystem staff projections show headline inflation averaging 2.1% in 2025, easing to 1.9% in 2026 and 1.8% in 2027, before returning to 2.0% in 2028. Core inflation excluding energy and food is projected at 2.4% in 2025, 2.2% in 2026, 1.9% in 2027 and 2.0% in 2028.

The inflation outlook for 2026 was revised higher, mainly reflecting expectations that services inflation will decline more slowly than previously anticipated.

On growth, projections were revised higher across the forecast horizon. GDP is now expected to expand by 1.4% in 2025, 1.2% in 2026 and 1.4% in 2027, with growth holding at 1.4% in 2028. The improvement is driven primarily by stronger domestic demand.

BoE cuts to 3.75% with hawkish vote, future easing a closer call

The BoE delivered a widely expected 25bps rate cut, taking Bank Rate to 3.75%. However, the decision was accompanied by a surprisingly hawkish 5–4 vote split.

Supporters of the cut, led by Governor Andrew Bailey (with Sarah Breeden, Swati Dhingra, Dave Ramsden and Alan Taylor), argued that disinflation remains broadly on course. Some members emphasized that "upside risks to inflation had continued to recede". Others focused on weakening activity and downside inflation risks.

In contrast, four members (Megan Greene, Clare Lombardelli, Catherine L Mann and Huw Pill) voted to hold rates steady, expressing concern on "prolonged inflation persistence". They highlighted elevated services inflation, wage growth, and inflation expectations. These members are "not convinced that the monetary policy stance was meaningfully restrictive" That main require a more "prolonged period of policy restriction".

Overall, while reaffirming that Bank Rate is likely to continue on a "gradual downward path", it stressed that further easing decisions will become a "closer call".

GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.3315; (P) 1.3372; (R1) 1.3431; More...

GBP/USD rebounds notably but stays below 1.3455 temporary top. Intraday bias remains neutral at this point. On the upside, above 1.3455 will resume the rebound from 1.3008. Firm break of 1.3470 resistance will pave the way to retest 1.3787 high. However, sustained break of 55 D EMA (now at 1.3295) will argue that the rebound has completed. Deeper fall would be seen back to 1.3008 support to resume the whole corrective pattern from 1.3787 high.

In the bigger picture, current development suggests that fall from 1.3787 is merely a corrective move, and larger rise from 1.0351 (2022 low) is still in progress. Firm break of 1.3787 will target 1.4248 (2021 high) key structural resistance. This will remain the favored case as long as target 38.2% retracement of 1.0351 to 1.3787 at 1.2474 holds, in case of another fall.

US initial jobless claims fell -13k to 224k in the week ending December 13, matched expectations. Four-week moving average of initial claims rose 500k to 217.5k.

Continuing claims rose 67k to 1897k in the week ending December 6. Four-week moving average of continuing claims fell -14k to 1902.

Full US jobless claims release here.

US inflation slowed more than expected in November, with the data compared against September levels due to the absence of October figures following the government shutdown.

Headline CPI eased from 3.0% yoy to 2.7%, undershooting expectations for a pickup to 3.1%. Core CPI also surprised to the downside, slowing from 3.0% yoy to 2.6% , well below forecasts for no change at 3.0%.

The broad-based moderation reinforces the view that underlying inflation pressures are easing faster than previously anticipated. Within the components, energy prices rose 4.2% yoy, while food prices increased 2.6% yoy.

Full US CPI release here.