Sample Category Title

• After Fed decision, dollar traders lock gaze on NFP and CPI data.
• Will the BoE deliver a dovish interest rate cut?
• ECB expected to reiterate “good place” mantra.
• Will a BoJ rate hike help the yen recover some of its massive losses?

Less-hawkish-than-expected Fed hurts the Dollar

The highly anticipated December Fed decision is behind us, leaving a taste of extreme division among its members, and prompting investors to sell the US dollar. The Committee decided to cut interest rates by 25bps as was widely anticipated, but the updated dot plot pointed to only one single quarter-point reduction for next year.

At first glance this could be characterized as a hawkish cut, especially with two members voting for interest rates to remain on hold, and six officials placing their dot for this year to signal their preference for an unchanged rate.

That said, the dots for 2026 were widely and evenly spread, with four members advocating for no rate cuts in 2026, four favoring one prediction, and four wanting two. So, the median for 2026 did not represent a majority opinion; rather, it was the average of those three equally supported levels.

More importantly, the Committee announced that it will begin purchasing short-term Treasury bills as part of its reserve management operations, with the aim of supporting market liquidity and maintaining control over interest rates.

Combined with a less-hawkish-than-expected press conference by Fed Chair Powell, who highlighted slowing jobs growth and uncertainty about the labor market, this may have been the main reason behind the dollar’s slide, with investors remaining convinced that the Fed may need to cut twice next year.

NFP and CPI inflation to impact Fed rate bets

This week, the spotlight is likely to fall on the shutdown-delayed NFP report for November, due out on Tuesday and the CPI numbers for the same month, due out on Thursday. The ADP report for November revealed that the private sector lost 32k jobs, missing analysts’ estimate of a 5k gain, which tilts the risks to the NFP report to the downside.

Even if the CPI data reflects further stickiness in inflation, the Fed seems to be prioritizing the labor market for now, with Powell noting on Wednesday that the current overshooting of the 2% inflation goal is mostly due to tariffs and that it is likely to be a “one-time price increase.” Therefore, the inflation numbers are unlikely to fully reverse any dollar weakness ignited by Tuesday’s NFP report.

The preliminary S&P Global PMIs for December and the retail sales figures for November will also be released on Tuesday and Wednesday, respectively.

BoE to lower rates – Will it signal more cuts for 2026?

Besides the aftermath of the Fed and the key NFP and CPI data out of the US, investors will also have to digest three more central banks this week: The BoE and ECB on Thursday, and the BoJ on Friday.

Getting the ball rolling with the BoE, British policymakers kept rates unchanged in November but via a 5-4 vote, with the 4 dissenters favoring a rate cut and Governor Bailey being the only one of the five who supported the on-hold decision noting that overall inflation risks had moved down. This was probably interpreted as a signal by Bailey that he will join those wanting a rate cut at Thursday’s decision.

Since the prior meeting, data showed that the unemployment rate for September moved up to 5.0% from 4.8%, economic growth slowed to 0.1% in Q3 from 0.3%, and both the headline and core CPI rates moved slightly lower, although they both remain above 3%.

With all that in mind, investors are now assigning a 90% chance of a rate cut next week, while another quarter-point reduction is more-than-fully priced in by December 2026. It is also worth noting that the Bank of England projected that the latest budget plan announced by finance minister Reeves will reduce the annual inflation rate by around 0.4 to 0.5 percentage points from around the second quarter until the end of 2026.

Thus, a rate cut accompanied by a dovish message could prompt investors to bring forward the timing of the next rate cut and perhaps add some more basis points worth of reductions to their bets for next year. Such an outcome could weigh on the British pound.

Ahead of the decision, a barrage of UK data will be released. The employment report for October and the flash PMIs for December will come out on Tuesday, followed by the CPI and retail sales data on Wednesday and Friday, respectively. A back-to-back slowdown in inflation could solidify the notion of a dovish hold the next day and may trigger a pound slide, even ahead of the BoE decision announcement.

ECB to stay sidelined, upward GDP revisions likely

Around an hour or so after the BoE announcement, it will be the ECB’s turn to make its monetary policy decision public. At the prior meeting, ECB policymakers kept interest rates unchanged, reiterating the view that policy was in a “good place” as the economy was showing signs of health and inflation was close to target.

This week, on Wednesday, ECB President Lagarde said that the resilience of the Eurozone economy to trade tensions and its near-potential growth could prompt the Bank to proceed with upwardly revised GDP projections at next week’s gathering. Taking things a little bit further, ECB Board member Isabel Schnabel told Bloomberg News on Monday that the Bank’s next move may be a rate hike, though it will not happen in the near future.

With all that in mind, investors expect the ECB to stand pat next week, and they are factoring in a respectable 36% chance of a rate hike by the end of next year. Therefore, a reiteration of an upbeat message could help Euro/Dollar march higher, especially if the flash S&P Global PMIs on Tuesday corroborate the notion that the Euro area economy is faring well.

BoJ prepares to raise rates; forward guidance to be scrutinised

Last but not least, the BoJ is now seen raising interest rates with a chance of 75%. As for next year, investors are penciling in another 40 basis points worth of hikes, which translates into another quarter-point reduction and a 60% probability of a third.

Following the election of fiscal dove Sanae Takaichi as Japan’s new Prime Minister, investors scaled back their bets about a potential December hike, but recent remarks by Governor Ueda, as well as reports by Bloomberg and Reuters, revived speculation about action. Yet, the yen failed to massively capitalize on the increasing hawkish expectations.

Therefore, should the Bank press the hike button as largely anticipated, the focus will quickly shift to hints and clues about how the Bank is planning to proceed in 2026. If policymakers fail to match the market’s latest hawkish shift, the yen is likely to resume its prevailing downtrend. However, as dollar/yen moves closer to the psychological zone of 160.00, Finance Minister Katayama may become vocal again in expressing concerns about the yen’s slide and perhaps mention the probability of intervention. All this means that upside risks surrounding the yen are unlikely to vanish, even if the BoJ disappoints market participants on Friday.

Solid macro data and hawkish comments from ECB's Schnabel have moved investors' perception of the ECB's next move from cut to hike. This has triggered a further move higher in European bond yields this week. French bonds did experience some tailwinds, though, as the parliament narrowly approved next year's social security budget. Challenges remain ahead with the main budget up for debate next week. It has faced tougher opposition.

A not-so hawkish message from Fed chair Powell also dampened the upward trend in bond yields a bit. USD lost some ground in a week where equity markets edged higher, following the Fed communication. The Fed cut rates as widely expected and Powell made it clear that they are in no hurry to ease further. He also (against ours and markets' expectations) refrained from clearly pushing back against the market pricing, which currently sees slightly more than 50bp of additional cuts for the coming year. The JOLTS report indicated robust labour demand. Details were less rosy, though, as voluntary quits and hires declined, while involuntary layoffs increased.

In Germany, industrial production was significantly stronger than expected in October and Sentix data indicates that investors and analysts have become slightly less pessimistic on the euro area economic recovery in December. We expect PMIs will confirm the picture of decent activity next week.

More central banks will be busy taking a stance on their monetary policy. We expect to see a cut, a hike and a hold decision. The ECB will take the latter decision and reiterate that they are in a good place and signal that they will be on hold for a while. We see rates steady for the coming two years. We expect The Bank of England will deliver the cut as we have seen softer inflation, steeper job losses and GDP decline recently. The policy committee is divided, though, and we get fresh CPI data and a labour market report ahead of the meeting.

We count on the Bank of Japan to deliver the hike. In Japan, wages continue to struggle compensating for inflation with real earnings down 0.7% y/y. Besides that, the economy looks solid, though, and tightening is due to avoid further yen slide, which would be unconstructive for the aim of reeling in cost-push inflation. Ahead of the meetings, we will know more of the current shape of the respective economies with the Tankan business survey published in Japan and PMI data released for all three economies.

The data highlight of the week will be the delayed October/November jobs report from the US, where we believe the slowdown in labour supply growth will reflect in a modest 20K/50K job growth. US November CPI data will also be very interesting after the October data was cancelled. We expect core inflation steady at 3.0% yoy.

China releases their big monthly batch of data. We expect it to show more of the same, i.e. still weak consumer spending and housing market but decent increase in industrial production supported by robust exports.

Full report in PDF. 

• We expect the Bank of England to cut the Bank Rate by 25bp to 3.75% in line with market expectations. The MPC is split in half, and we expect a 5-4 vote.
• Although key data releases ahead of the meeting could change circumstances, we believe a significantly hawkish surprise is needed to put a rate cut in jeopardy.
• With a divided MPC, we will need more disinflationary signs before we get the final rate cut in April. This will also most likely be reiterated in the guidance.
• If we are right, we expect slightly weaker GBP on announcement.

We expect the Bank of England (BoE) to cut the Bank Rate to 3.75% on Thursday 18 December, which is also largely priced in by investors. At the November meeting, the MPC decided to keep rates unchanged by a narrow 5-4 vote. Governor Bailey casted the deciding vote for hold with the view: "Rather than cutting Bank Rate now, I would prefer to wait and see if the durability in disinflation is confirmed in upcoming economic developments this year". We believe it has been confirmed.

CPI inflation declined to 3.6% in October in line with BoE projections with service inflation slightly lower than consensus. This was not in itself a low print, but it confirmed that the soft September print was not just a blip. On the labour market, job losses have accelerated in the fall with most recent data, showing a 32K decline in September and October. The unemployment rate increased to 5% and wage growth has been edging lower in September. GDP data for October also disappointed with another 0.1% mom contraction driven by a weak service sector. The economy has not grown since June.

The fiscal stance laid out in the 2026 budget was mildly contractionary with no new inflation headaches from VAT hikes but with modest cuts to energy bills. We think the news since the November meeting will suffice for Governor Bailey to journey into the camp voting for a rate cut, although the labour market report and CPI data released in the days ahead of the meeting is a joker. According to November PMIs it does not look like, these releases will change the dovish picture much. They suggest, price pressures have eased further, and job losses have accelerated.

BoE call. Considering the recent tunes from the most hawkish members of the MPC, we see neither Lombardelli, Pill, Mann or Greene voting for a rate cut any time soon. Parti-cularly not to 3.50%. Thus, rate cuts need to be taken with a slim 5-4 decision. Ramsden, who voted for cut in November, has also stressed the need for gradual cuts to borrowing costs. We think Bailey will take a cautious approach and listen to both sides when timing the next rate cut and that a majority will vote for a final rate cut at the April meeting.

Market reaction. We expect slightly weaker GBP on announcement. More broadly, we stay negative on GBP FX on a relatively weak growth outlook and a positive correlation to a USD negative environment.

As highlighted in our overnight session rewind, Gold has quickly breached above $4,300 and is now racing towards new all-time highs.

The Fed's cutting cycle and overall 2025 US Exceptionalism from the Trump Administration have had a considerable effect on the demand for non-fiat assets, and Gold is the primary beneficiary of such demand.

The financial world order since the early 2000s has been characterized by high demand for US Treasuries.

As the US maintained higher rates relative to others, even during the Global Financial Crisis, and consequently recovered much more solidly than its OECD peers, it absorbed the flows from the entire globe.

US Debt holdings by Foreign Investors (Central Banks and others) – Source: St. Louis Fed

Metals, on the other hand, were getting replaced by their yielding rivals - Treasuries.

Some Countries, like Canada, have emptied their gold reserves, for example, Making Questionable decisions.

However, as yields had been trending lower, particularly after the QE, demand for metals reformed again, and now, their attraction is without question.

Gold demand from 1992 to 2022 – Courtesy of Elements-VisualCapitalist.

Government deficits are ever-increasing, even with a stable global economy, and the US seemingly cannot be as trustful of a global riches reserve, given the several diplomatic heatwaves provided by Donald Trump.

Tariffs aren't the most welcomed policies if you want to retain buyers of your government bonds.

Particularly when you're cutting rates.

In any case, since reaching its COVID lows in March 2020 ($1,451), Gold is up close to 200%, and most of its gains have occurred since February 2024.

However, what is grabbing Markets' attention is how strong the acceleration has been ongoing since August 2025 and Powell's Jackson Hole speech, which may have been a turning point for global Markets.

Let's dive into a multi-timeframe Gold analysis to get a closer look on the post-FOMC rebound as the Yellow metal aims to protect its throne.

Gold (XAU/USD) Multi-Timeframe Analysis, Technical levels and Potential Price Targets

Daily Chart

Gold (XAU/USD) Daily Chart. December 12, 2025 – Source: TradingView

Our pre-FOMC Metals analysis pointed to a potential breakout in Gold after a triangle consolidation – And it is currently playing out.

Bulls used the 50-Day Moving Average as support. Keep a close eye on it as it has been serving as loyal support throughout 2025.

The rest will be to see if buyers can make the push beyond new highs.

Up 3.75% in 3 sessions, momentum is gathering some heat despite some not-so-dovish 2026 Fed Cut projections – Until more data is served for Markets (Tuesday 16 - US NFP) not much can come to stop the rally.

Metal buyers just wanted to see rates coming down, and they are getting served.

Silver and its ongoing frenzy is dragging demand for such commodities higher.

An interesting Chart: Silver to Gold Ratio

Silver to Gold Ratio – Monthly Chart. December 12, 2025 – Source: TradingView

4H Chart, Technical Levels and potential Price targets

Gold (XAU/USD) 4H Chart. December 12, 2025 – Source: TradingView

As indicated in our recent piece (link just above), a measured move higher (Yellow squares) could take prices anywhere to $4,500 to $4,575 if buyers manage to break recent highs.

Levels to watch for Gold (XAU/USD) trading:

Resistance Levels

• Current All-time High resistance $4,300 to $4,400
• $4,380 Current all-time Highs
• Fib-Induced potential new ATH resistance $4,500 to $4,575
• Session highs $4,346 (and counting)

Support Levels

• Hourly Pivot and Triangle top $4,200 to $4,240
• 50-Day MA $4,150
• Major Pivot $3,950 to $4,000 (200-period MA)
• $3,700 consolidation Support
• $3,500 Major Support

1H Chart

Gold (XAU/USD) 1H Chart. December 12, 2025 – Source: TradingView

Despite the overbought conditions on all timeframes, the rally isn't showing signs of stopping.

Watch for any stalling of momentum however.

A consolidation between $4,300 to $4,350 provides higher chances of a breakout as the RSI slows down.

A retracement however points to a more balanced price action going forward.

Safe Trades!

Markets

Two of Wednesday’s dissenters at the Fed hit the wires today. Goolsbee and Schmid both favoured to keep the rate steady but it appears both had a different angle to do so. Schmid wants to keep monetary policy slightly restrictive, citing a balanced labour market but too high inflation and an economy that’s showing momentum. Goolsbee on the other hand was simply concerned on frontloading cuts too much. He wanted to wait till Q1 after some “concerning” inflation data prior to the shutdown. He went on to say he’s projecting more cuts than the median and thinks rates can come down “a significant amount” next year. Neither policymaker had a material impact on (short-term) US rates though. We do see some (natural?) bear steepening of global curves in an otherwise quiet trading session. Long-end yields rise up to 5 bps in the US and around 4 bps in Europe and the UK. European stocks inch higher with the EuroStoxx50 now just a sigh away from its November record high. Tech on WS underperforms following Broadcom’s (lofty) sales outlook miss but declines for the likes of the Nasdaq are limited to 0.3%. The dollar recovers some ground after a two-day beating. EUR/USD trades near 1.173, DXY grinds higher to 98.48. Sterling extends yesterday’s losses after a poor set of economic data this morning in which the surprising monthly GDP drop stood out. EUR/GBP recovers the previously lost support area at 0.8769.

Today’s poor economic calendar puts the spotlight on the one of the coming week. The US publishes November payrolls on Tuesday along with October retail sales and December PMIs that day. November inflation figures are scheduled on Thursday. They carry big value coming after a Fed that cut rates for a third time this week but basically moved in the dark due to the lack of economic input. They’ll certainly shape market expectations for the Fed in early 2026. We consider a weak(er than expected) batch to have the bigger moving potential (ie. lower US rates and dollar) by markets upping the ante for January. The Bank of Japan’s Q4 Tankan on Monday should convince the remaining (if any) doubters on upcoming rate hike at Friday’s policy meeting. Inflation figures are published the same day and will be an above 2% target reading for the umpteenth month running. The UK central bank meets and likely lowers rates to 3.75%. The BoE has to move cautiously though with November inflation - released on Wednesday - expected to be trending north of 3% still. UK PMI business confidence and the October labour market report is on tap Tuesday. The ECB by Thursday will also have a new set of PMIs at its disposal. President Lagarde already hinted earlier this week at another upgrade to the growth forecasts, cementing the case for a 2% deposit rate for longer. She might get grilled on the impact of the carbon tax being postponed on the inflation outlook in 2027. It could push inflation below target but we expect the central bank look through it since it is out of monetary reach. Additionally, having the tax postponed could also be considered as a positive demand shock that at least partially replaces the cost push shock.

News & Views

The Bank of England published its quarterly Inflation Attitudes Survey, conducted by Ipsos. The perception of the UK inflation rate amongst surveyed residents stood at 4.7%, slightly less than the 4.8% in August. Inflation expectations for the next 12 months, the 12 months thereafter and the long-term (5-yr) were all 0.1 ppt lower as well at respectively 3.5%, 3.3% and 3.7%. When asked about the future path of interest rates, 38% of respondents expected rates to rise over the next 12 months, up from 33%. 24% said they expected rates to stay about the same over the next twelve months (from 26%) and 25% said they expected rates to decline over the next twelve months (from 29%). Respondents were also asked to assess the way the Bank of England is ‘doing its job to set interest rates to control inflation’. The net satisfaction balance, the proportion satisfied minus the proportion dissatisfied, was -1%, down from 2% in August.

SEB research’s quarterly investor survey, targeting large Swedish institutional fixed income investors, showed all respondents expected an unchanged Riksbank policy rate at 1.75% in December and January. For December 2026, policy rate expectations shift to the upside. 40% of the respondents predict at least one rate hike, while the share expecting a rate cut have increased only slightly to 28% (from 24% in June). For December 2027, expectations for rate hikes dominate even more. A broad majority (72%) expect the policy rate to be above the current level (1.75%), while the share predicting a policy rate below declines to 12%. The median expectation for the policy rate is 2.25%.

Daily Pivots: (S1) 1.1692; (P) 1.1727; (R1) 1.1773; More….

Intraday bias in EUR/USD remains on the upside as rise from 1.1467 is in progress. Current development suggests that fall from 1.1917 has completed as a correction to 1.1467. Further rally should be seen to retest 1.1917 high. For now, risk will stay on the upside as long as 1.1614 support holds, in case of retreat.

In the bigger picture, as long as 55 W EMA (now at 1.1346) 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) 0.7917; (P) 0.7961; (R1) 0.7998; More…

Intraday bias in USD/CHF stays on the downside for 0.7877 support. Firm break there will argue that large down trend is ready to resume through 0.7828 low. ON the upside, though above 0.7990 support turned resistance will turn intraday bias neutral again first. Overall, price actions from 0.7828 are seen as a corrective pattern that might still extend further.

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) 154.95; (P) 155.56; (R1) 156.17; More...

Intraday bias in USD/JPY remains neutral as consolidations from 157.88 continues. On the downside, break of 154.33 will target 55 D EMA (now at 153.58) and possibly below. On the upside, above 156.94 will bring retest of 157.88. Firm break there will resume whole rally from 139.87 to 158.85 key structural resistance.

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) 1.3349; (P) 1.3393; (R1) 1.3432; More...

Intraday bias in GBP/USD is turned neutral with current retreat, and some consolidations would be seen below 1.3438 temporary top. But further rally is expected with 1.3286 support intact. As noted before, fall from 1.3787 should have completed as a three-wave correction to 1.3008. Above 1.3438 will target 1.3470 resistance. Firm break there will pave the way to retest 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.

Dollar edged modestly higher into the final US session of the week, though follow-through remains limited. The rebound looks more like position adjustment than conviction, with markets reluctant to chase the greenback ahead of next week’s key data.

Attention briefly turned to fresh remarks from two Fed officials who dissented against this week’s 25bps rate cut. Chicago Fed President Austan Goolsbee struck a relatively measured tone, stressing a preference to wait for more inflation data before easing further rather than opposing cuts outright. By contrast, Kansas City Fed President Jeffrey Schmid reiterated a firmer stance, arguing policy before the cut was already appropriate and not overly restrictive.

Despite the hawkish pushback, market reaction was muted. Investors appear comfortable with the Fed’s current trajectory, seeing the dissent as part of an ongoing internal debate rather than a signal of an imminent policy shift. A January pause remains the base case, while pricing for a March cut still sits close to a coin toss.

In weekly FX performance, Yen remains pinned to the bottom, followed by Dollar. Sterling slipped to third weakest after today’s UK GDP disappointment. Swiss Franc leads after the SNB signaled earlier in the week no urgency to return to negative rates, with Euro second-best and Kiwi following. Loonie and Aussie remain stuck in the middle.

That distribution reflects a mixed but balanced risk backdrop. Traditional US stocks continue to draw support from expectations of extended Fed easing into next year, while tech shares remain capped by lingering AI valuation concerns, keeping overall sentiment from tilting decisively in either direction.

In Europe, at the time of writing, FTSE is down -0.06%. DAX is up 0.24%. CAC is up 0.62%. UK 10-year yield is up 0.002 at 4.514. Germany 10-year yield is up 0.021 at 2.868. Earlier in Asia, Nikkei rose 1.37%. Hong Kong HSI rose 1.75%. China Shanghai SSE rose 0.41%. Singapore Strait Times rose 1.45%. Japan 10-year JGB yield rose 0.024 to 1.955.

Fed's Schmid: Policy not overly restrictive before rate cut

Kansas City Fed President Jeffrey Schmid explained his dissent at this week’s FOMC meeting, where he voted to keep rates unchanged. He said in a statement his assessment of the economy has not shifted meaningfully since October, citing "continued momentum" in activity and inflation that remains above comfort levels.

Schmid described inflation as “too high” and the labor market as cooling but still “largely in balance.” In that context, his preference is to maintain monetary policy in a "modestly restrictive" setting rather than ease prematurely.

Addressing debate around policy restrictiveness, Schmid downplayed reliance on theoretical estimates of the neutral rate, calling r* an academic concept without a real-world equivalent. Instead, he said policy should be judged by "how the economy actually evolves". From both incoming data and business contacts, he sees an economy that is "showing momentum and inflation that is too hot", suggesting that policy is "not overly restrictive".

Fed's Goolsbee: Waiting for more data the “wiser choice”

Chicago Fed President Austan Goolsbee explained his dissent at this week’s FOMC meeting, where he voted to hold rates rather than support the 25bps cut. He said policymakers should have waited for more incoming data, particularly on inflation, arguing that delaying the decision into the new year "would not have entailed much additional risk" and would have allowed the Fed to assess a more complete set of economic readings.

In a statement, Goolsbee noted that feedback from businesses and consumers in his district consistently points to prices as "a main concern". At the same time, he described the broader economy as showing stable growth, with a labor market that is “only moderately cooling”. He characterized the current environment as one of “low hiring, low firing,” suggesting firms are responding to uncertainty rather than a traditional cyclical slowdown.

While acknowledging that recent inflation pressures may be linked largely to tariffs and could ultimately prove "transitory", Goolsbee cautioned against assuming that outcome too quickly. He reiterated optimism that interest rates can fall meaningfully over the coming year, but stressed discomfort with heavily front-loading cuts.

UK GDP contracts -0.1% mom in October as services drag deepens

UK GDP contracted by -0.1% mom in October, undershooting expectations for a 0.1% gain and marking a third consecutive month of stagnation or contraction. The economy had already shrunk by -0.1% in September after flat growth in August, reinforcing concerns that momentum is fading as the year draws to a close.

The monthly breakdown was weak across key domestic sectors. Services output fell -0.3% mom and construction declined -0.6%, offsetting a 1.1% rise in production. The continued softness in services is particularly concerning given its dominant share of UK economic activity.

On a three-month basis, GDP fell -0.1% in the period to October compared with the previous three months. Services recorded no growth, extending the recent trend of slowing activity, while production output dropped -0.5% due largely to weaker motor vehicle manufacturing. Construction also declined by -0.3%.

New Zealand BNZ manufacturing improves to 51.1, but momentum still modest

New Zealand’s BNZ Performance of Manufacturing Index edged up from 51.2 to 51.4 in November, remaining in expansionary territory but still below the long-run average of 52.4.

Production strengthened from 52.0 to 52.8, while employment rebounded sharply from contractionary 48.3 to 52.4, suggesting manufacturers are becoming more confident about staffing needs. That said, new orders softened notably, slipping from 54.5 to 51.9, highlighting lingering caution about the sustainability of demand beyond the seasonal boost.

Survey commentary was more encouraging. The share of negative comments fell to 45.6% from 54.1% in October and 60.2% in September. Respondents cited stronger Christmas-related demand, improving economic conditions, rising customer confidence, and a pickup in both domestic and overseas orders, alongside firmer construction activity and new product launches.

GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.3349; (P) 1.3393; (R1) 1.3432; More...

Intraday bias in GBP/USD is turned neutral with current retreat, and some consolidations would be seen below 1.3438 temporary top. But further rally is expected with 1.3286 support intact. As noted before, fall from 1.3787 should have completed as a three-wave correction to 1.3008. Above 1.3438 will target 1.3470 resistance. Firm break there will pave the way to retest 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.