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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.

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.

Full ECB statement here.

18 December 2025

The Governing Council today decided to keep the three key ECB interest rates unchanged. Its updated assessment reconfirms that inflation should stabilise at the 2% target in the medium term.

The new Eurosystem staff projections show headline inflation averaging 2.1% in 2025, 1.9% in 2026, 1.8% in 2027 and 2.0% in 2028. For inflation excluding energy and food, staff project an average of 2.4% in 2025, 2.2% in 2026, 1.9% in 2027 and 2.0% in 2028. Inflation has been revised up for 2026, mainly because staff now expect services inflation to decline more slowly. Economic growth is expected to be stronger than in the September projections, driven especially by domestic demand. Growth has been revised up to 1.4% in 2025, 1.2% in 2026 and 1.4% in 2027 and is expected to remain at 1.4% in 2028.

The Governing Council is determined to ensure that inflation stabilises at its 2% target in the medium term. It will follow a data-dependent and meeting-by-meeting approach to determining the appropriate monetary policy stance. In particular, the Governing Council’s interest rate decisions will be based on its assessment of the inflation outlook and the risks surrounding it, in light of the incoming economic and financial data, as well as the dynamics of underlying inflation and the strength of monetary policy transmission. The Governing Council is not pre-committing to a particular rate path.

Key ECB interest rates

The interest rates on the deposit facility, the main refinancing operations and the marginal lending facility will remain unchanged at 2.00%, 2.15% and 2.40% respectively.

Asset purchase programme (APP) and pandemic emergency purchase programme (PEPP)

The APP and PEPP portfolios are declining at a measured and predictable pace, as the Eurosystem no longer reinvests the principal payments from maturing securities.

***

The Governing Council stands ready to adjust all of its instruments within its mandate to ensure that inflation stabilises at its 2% target in the medium term and to preserve the smooth functioning of monetary policy transmission. Moreover, the Transmission Protection Instrument is available to counter unwarranted, disorderly market dynamics that pose a serious threat to the transmission of monetary policy across all euro area countries, thus allowing the Governing Council to more effectively deliver on its price stability mandate.

The President of the ECB will comment on the considerations underlying these decisions at a press conference starting at 14:45 CET today.

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".

Full BoE statement here.