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Eurozone retail sales disappointed in September, falling -0.1% mom, missing expectations of a 0.2% gain. The decline was driven mainly by weaker spending on non-food items, which slipped -0.2%, and a sharp -1.0% drop in automotive fuel sales. Meanwhile, sales of food, drinks, and tobacco were unchanged.

Across the broader EU, retail sales managed a modest 0.1% monthly rise, masking divergent trends among member states. The steepest declines were seen in Lithuania (-1.1%), Latvia and Slovenia (-0.7%), and Italy (-0.6%), while Luxembourg and Malta (+1.7%), along with Estonia (+1.5%) and Slovakia (+1.4%), posted strong rebounds.

Full Eurozone retail sales release here.

The GBP/USD pair is attempting to find support around 1.3062 on Thursday, with investors cautiously positioning themselves ahead of today's pivotal Bank of England (BoE) monetary policy meeting. The British currency remains under pressure, trading near a seven-month low against the US dollar and at its weakest level in over two years against the euro.

Market pricing currently implies roughly a one-in-three chance of a 25-basis-point rate cut from the BoE. This uncertainty creates significant asymmetric risk, meaning the pound is poised for a sharp move in either direction once the decision and accompanying statement are released.

The pound's weakness was compounded by the recent release of softer-than-expected UK inflation data, which bolstered expectations for an imminent shift towards policy easing. A simultaneous global sell-off in equity markets, particularly in the tech sector, has further dampened sentiment by reducing appetite for risk-sensitive assets such as sterling.

Adding to the headwinds, investor focus is shifting to the UK budget, due for approval later this month. Chancellor Rachel Reeves has signalled the potential for tax rises, a measure that could stifle economic growth and potentially prompt the BoE to adopt a more dovish stance – another factor weighing on the currency.

Technical Analysis: GBP/USD

H4 Chart:

On the H4 chart, GBP/USD broke downwards from a consolidation range around 1.3140, completing a bearish wave to 1.3010. We now anticipate a technical correction towards 1.3090. Following this pullback, the primary downtrend is expected to resume, with the next key targets at 1.2910 and, ultimately, 1.2811. The MACD indicator supports this bearish outlook. While its signal line is at deeply oversold levels and has diverged from its histogram, suggesting the potential for a short-term corrective rise, the overall structure remains negative.

H1 Chart:

On the H1 chart, the pair similarly broke down from a range around 1.3157, reaching the 1.3010 target. A corrective retracement to test 1.3100 from below is now expected. Once this correction is complete, the downtrend is likely to extend towards at least 1.2950. The Stochastic oscillator aligns with this view. Its signal line is in overbought territory above 80 and appears poised to turn down towards 20, indicating that any near-term strength is likely corrective before selling pressure reasserts itself.

Conclusion

GBP/USD is stabilising at multi-month lows ahead of a high-stakes BoE meeting. The combination of dovish inflation data, a risk-off market mood, and looming fiscal uncertainty has created a profoundly negative backdrop for sterling. Technically, the path of least resistance remains downward. While a short-covering bounce back towards 1.3100 is possible post-decision, the broader trend suggests further losses, with key targets at 1.2910 and 1.2811.

Markets

The Bank of England has a reputation of daring to surprise. It’s nickname – unreliable boyfriend – is testament to that. Today we might see one of those upsets with UK money markets discounting a 25% probability to a 25 bps rate cut, but the decision probably being a much closer call than that. Much will depend on BoE governor Bailey’s own views and/or his skills to build consensus around the decision. Over the past months, split vote after split vote highlighted the extreme division in the 9-headed MPC. Hawks including BoE chief economist Pill or Greene assess the still lingering inflation threat as key and don’t want to err on the side of loosening the central bank’s grip too early with the risk of igniting more price pressures with a less restrictive monetary policy. Their main arguments lost strength though over the past month with official September CPI inflation peaking at a lower level than feared and underlying dynamics showing a weakening impact from food inflation (also in preliminary October data). The latter has an outsized impact in shaping inflation expectations. Also arguing in favour of a steady outcome today is uncertainty related to the November 26 Budget presentation by Chancellor Reeves. The doves inside the BoE are more concerned about a rapidly deteriorating UK labour market, witnessed both by the official data and in the less formal business circuit often mentioned by BoE Bailey. Implementing the Fed’s “risk management” strategy argues in favour of lower the policy rate today, especially if backed by a more benign inflation dynamic in the new quarterly Monetary Policy Report. The (negative) economic impact of the tax-lifting budget might also in the end be bigger than the (if any) inflationary effects. From a market point of view, we think that sterling is vulnerable both to a dovish pause and especially to an effective rate cut (our preferred scenario). UK money markets only fully discount another 25 bps move lower by the February 2026 meeting and only 50 bps of cumulative decreases over the next 12 months. EUR/GBP broke 0.8768/69 resistance last week with follow-up action levels above 0.88. The 2023-top at EUR/GBP 0.8979 is the next big reference.

News & Views

The Brazilian central bank left its policy rate unchanged at 15% for a third consecutive meeting. Vigilance remains warranted, but the tone of the communiqué shows some more comfort that ‘maintaining the interest rate at its current level for a very prolonged period will be enough to ensure the convergence of inflation to the target’. In September, the central bank still formulated this assessment in a more conditional way. With respect to the domestic economy, the BCDB sees economic growth moderating but the labor market is still showing strength. Headline inflation and measures of underlying inflation have shown some improvement but like inflation expectations for 2025 (4.5%) and 2026 (4.2%) remain above the 3% inflation target. Inflation projections show a declining path from 4.8% for this year and 3.6% for next to 3.3% at the end of the policy horizon (Q2 2027; from 3.4% in September). The real (USD/BRL 5.357) is holding strong after already a good rally against the dollar earlier this year (YTD + 13.5%)

The National Bank of Poland (NBP) yesterday further reduced its policy rate by 25 bps to 4.25%. The NBP says that taking into account a decline in inflation and an improved inflation outlook for the coming quarters, in the Council’s assessment, it became justified to adjust the level of the NBP interest rates. October CPI inflation declined to 2.8% Y/Y (from 2.9% in September 2025), largely due to lower annual growth of food prices, but the NBP estimates that inflation net of food and energy prices also decreased, even as services price growth remains elevated. In its new forecast, the NBP sees the 2025 inflation target range at 3.6-3.7% (from 3.5%-4.4%). For 2026 the range is set at 1.9%-4% (from 1.7%-4.5%) and for 2027 at 1.1%-4.1% (from 0.9%-4.3%). The NBP has an inflation target of 2.5% (+/- 1%). Further decisions of the Council will depend on incoming information regarding prospects for inflation and economic activity. Fiscal policy, recovery of demand in the economy and elevated wage growth remain risk factors for low inflation. Uncertainty stems also from the level of energy prices and inflation developments abroad. The zloty yesterday gained modestly after the decision closing near EUR/PLN 4.256.

Selloff across major US indices slowed yesterday as pressures eased and dip-buyers came in to amass their favourite stocks at slightly lower levels than the recent all-time highs, while attention shifted toward rare economic data and messy politics.

First, the Supreme Court hearing yesterday revived discussions about the legality of Trump’s tariffs. Half of the six members of the GOP-appointed supermajority on the Court expressed skepticism toward arguments defending Trump’s wide-ranging and steep tariff rates imposed on the rest of the world. Yesterday’s hearing therefore suggested that Trump’s tariffs could be rolled back. Prediction markets slashed the probability of these tariffs surviving from the 40–50% range to around 25–30%.

Is it good news? Paradoxically, not really — because it brings uncertainty, renewed volatility, potentially more than $100 billion in refunds the US government may owe to other countries according to Bloomberg, and a deeper fiscal deficit. That’s concerning, especially considering that US debt has now surpassed the $38 trillion mark and is marching toward the $40 trillion psychological level — with nothing in sight to stop the climb. That certainly helped explain why the US 10-, 20-, and 30-year yields pushed higher yesterday.

A better-than-expected ADP print also supported a rise in shorter maturity yields. This week marks the first of a new month — and if the US government were open, we’d be getting the latest official jobs report. But since it remains shut, investors only have private data to rely on. The ADP report showed 42K new private-sector jobs last month, better than the 29K losses in the prior month and the 32K expected. Still, it’s a weak number, and a series of sub-50K prints would point toward recession. But for now, the slightly stronger-than-expected data further weakened the Federal Reserve (Fed) doves’ case. The US 2-year yield — a good gauge of Fed expectations — jumped past 2.60%, while the probability of a December rate cut fell to around 62.5%.

So I’m a little surprised the early-week selloff didn’t extend into a third day. This morning, we see a slightly improved tone in Asia. The tech-heavy Hang Seng returned above its 50-day moving average as local chipmaker SMIC jumped 5% and Alibaba rebounded 3% after the Chinese government banned state-funded data centers from using foreign chips. MSCI is also reshuffling its index to include more Chinese names, helping Chinese equities attract fresh inflows from global investors. Earlier this week, the People’ Bank of China (PBoC) bought bonds to shore up liquidity. As such, Chinese stocks remain in the race and continue to offer diversification versus US tech, as Jensen Huang said China “will win” the AI race with the US.

You know who might not win the race? Tesla. The company has been overtaken by BYD in UK vehicle registrations and is narrowing the gap in Germany. And in October, Tesla sold just 133 cars in Sweden. When I say Tesla doesn’t deserve this hype — and that the P/E ratio of 332 shows the gap between its stock price and reality — I mean it. There could also be some drama if Elon Musk fails to get his trillion-dollar pay package approved, with several large investors reportedly opposed to it.

Elsewhere, European carmakers could feel the pressure of renewed tensions over Nexperia, after reports that the company again halted supply as its Chinese unit refused to pay.

US futures are flat. On one hand, the rebound in Treasury yields and concerns over Big Tech valuations weigh on sentiment; on the other, earnings keep coming in strong and dipbuyers are impatient to join in. Yesterday after the bell, Qualcomm joined its peers with better-than-expected revenue, earnings and guidance — alas, the stock still slipped 2.6% in after-hours trading.

Conclusion: The weather remains cloudy, bulls are hesitant, but the dip-buyers are never far away. I’m not even sure we can get a meaningful dip when retail investors are so eager to jump back in — we’ll see.

In precious metals, gold rebounded yesterday alongside higher US yields — a very unusual move, which I attribute to the latest meme-like rally that temporarily undermined its safe-haven status. There should be a deeper pullback and consolidation before gold can reclaim that role. The longer-term outlook, however, remains unchanged: when in doubt, just look at the debt levels in developed markets.

In currencies, the US dollar’s recent rally hit a speed bump at its 200-day moving average yesterday, and the greenback is broadly sold against most majors this morning. The EURUSD is back above 1.15 after defending a minor Fibonacci support — which may improve appetite in the short term, though resistance sits near 1.1580–1.16.

Across the Channel, Cable managed to hold at the 1.30 psychological mark. The Bank of England (BoE) will likely leave rates unchanged at today’s policy meeting. Even the dovish members may prefer waiting for the Autumn Budget details. Rachel Reeves hinted on Tuesday at what might be coming — perhaps to test market reaction — and potential tax hikes were surprisingly well received by the gilt market. The 10-year gilt yield stayed mostly contained, which could give the BoE room to cut rates at its next meeting. That’s bearish for sterling.

In focus today

In Sweden, the preliminary inflation figures for October are released at 08:00 CET. We expect core inflation at 2.65% (cons: 2.6%, prior: 2.7%) and headline CPIF at 2.95% (cons: 2.9%, prior: 3.09%). Our forecasts are one and three tenths above the Riksbank's, respectively. The data should underpin the Riksbank's view that inflation is heading lower, supporting their view that the elevated inflation is temporary. Erik Thedéen and Per Jansson will comment on monetary policy in separate speeches today, at 14:00 and 16:00 CET, respectively - we expect nothing new.

In Norway, we expect Norges Bank to keep the policy rate unchanged at 4.00% at today's MPC-meeting, with signals likely pointing to an unchanged rate in December as well. This is an interim meeting without new forecasts, only a press release and a press conference.

In the UK, the Bank of England meeting is scheduled, and we expect a non-consensus 25bp Bank rate cut to 3.75%. See more in Bank of England Preview - Softer inflation opens door for more easing, 31 October.

In the US, the Challenger Report for US layoff and hiring announcements is due for release for October. While not usually a tier-1 data point, we will keep an eye on the report amid the delays to official data.

In the euro area, data on retail sales for September are released. Retail sales have been stagnant for the past five months following increases early this year likely due to the weak consumer confidence.

In Germany, focus turns to industrial production. Industrial production showed a large and unexpected decline in August to levels seen only during the Covid pandemic and following the financial crisis.

Overnight, China releases trade data for October, which we expect to continue to show robust growth in exports. The numbers are quite volatile, though, so we could see some set-back after a decent rebound last month to 8.4% y/y.

Economic and market news

What happened overnight

In Japan, labour cash earnings rose 1.9% y/y in September, while real wages fell 1.4% y/y, marking the ninth consecutive decline as inflation outpaced wage growth. August's real wage drop was revised to 1.7% (prior: 1.6%). Wage growth remains crucial to the BoJ's rate hike timing, with the widening wage-price gap complicating the monetary policy outlook.

What happened yesterday

In the US, the Supreme Court heard arguments on the Trump administration's use of the International Emergency Economic Powers Act (IEEPA) to justify imposing emergency tariffs. A majority of justices across ideological lines appeared sceptical of the president's authority to implement such measures. Reflecting this scepticism, prediction markets dropped from 45% before the arguments to 25% this morning on the likelihood of a full administration victory. However, the arguments were not entirely one-sided, as several conservative justices acknowledged the president's broad powers in foreign affairs.

Also in the US, the ADP National Employment Report showed private sector jobs increased by 42k in October, stronger than the early estimate of +14k and consensus of +28k, and the previous month revised up by 3k. Growth was driven by education and healthcare, trade, transportation, and utilities, while job losses persisted in professional business services, information, and leisure and hospitality. Larger firms accounted for most of the net hiring.

ISM Services index for October rose to 52.4 (cons: 50.8, prior: 50), marking the strongest expansion since February, and with all subcomponents stronger than expected.

In Sweden, the Riksbank decided to maintain the policy rate at 1.75%, as widely expected. The central bank reiterated its September Monetary Policy Report, stating that: "The policy rate is expected to remain at this level for some time to come, in line with the forecast in September." On the SEK, the Riksbank also repeated its September outlook, saying the krona is expected to strengthen "somewhat" instead of "significantly" going forward. " Read more in Riksbank review - November 2025: On hold at 1.75% as expected - repeating September message, 5 November.

In the euro area, the final services PMI was revised up to 53.0 from 52.6 in the flash release. The flash release was already higher than consensus expectations of 51.2, so we got a significant, positive surprise in October. As the manufacturing PMI confirmed the flash release the composite PMI was revised up to 52.5. The euro area economy has thus entered the final quarter of the year with a solid momentum according to the PMIs, which should strengthen the case for unchanged policy rates in the ECB.

In the EU, member states agreed to a 2040 climate goal, including a delay to the start of the emission trading system for homes and road transport (ETS2), which is dovish for the ECB. Without ETS2, 2027 inflation is likely to undershoot, with ECB estimates suggesting a 0.0-0.4pp impact on headline inflation. While the law awaits European Parliament approval, its shift towards less ambitious climate policies makes approval likely. This move offsets some hawkish growth surprises in the ECB outlook.

In Poland, the National Bank of Poland lowered its main rate by 25bp to 4.25% at its November meeting, marking the fourth consecutive cut and aligning with market expectations.

Equities: Equities bounced back after Tuesday's mysterious pullback. Top performers were the stocks that had sold off in the previous session - primarily semiconductors and AI-capex-related names, with Intel, Qualcomm, and Caterpillar all up 3-4%. Overall, the S&P 500 rose 0.4% for the day (after slipping into the close), while the Stoxx 600 gained 0.2%. Whether the immediate rebound was driven by retail buying is open to speculation. However, as we discussed yesterday, the selloff was not rooted in macro concerns or any negative AI catalyst. This was evident in unchanged bond yields and a VIX that remained comfortably below 20. The recovery is continuing in Asia this morning, while US and European futures are flat, meaning the full decline from Tuesday has yet to be recouped.

FI and FX: The Riksbank held rates unchanged as expected and the meeting turned out to be a non-event for the market with EUR/SEK holding steady. EUR/USD consolidated below 1.15 yesterday after a stronger than expected ADP jobs report pushed US rates higher. The 10Y US Treasury yield rose after the US Treasury hinted it is considering increasing coupon issuance.

Daily Pivots: (S1) 1.1475; (P) 1.1487; (R1) 1.1504; More…

Intraday bias in EUR/USD is turned neutral with current recovery, and some consolidations would be seen above 1.1467 temporary low. Further decline is expected as long as 1.1727 resistance holds. Below 1.1467 will extend the fall from 1.1917 to 100% projection of 1.1917 to 1.1540 from 1.1727 at 1.1350. Decisive break there would prompt downside acceleration to 38.2% retracement of 1.0176 to 1.1917 at 1.1252.

In the bigger picture, considering bearish divergence condition in D MACD, a medium term top is likely in place at 1.1917, just ahead of 1.2 key psychological level. As long as 55 W EMA (now at 1.1306) holds, the up trend from 0.9534 (2022 low) is still expected to continue. Decisive break of 1.2000 will carry larger bullish implications. However, sustained trading below 55 W EMA will argue that rise from 0.9534 has completed as a three wave corrective bounce, and keep outlook bearish.

Daily Pivots: (S1) 153.27; (P) 153.81; (R1) 154.67; More...

USD/JPY is still bounded in consolidations below 154.47 and intraday bias stays neutral. Further rally is expected as long as 151.52 support holds. Above 154.47 will resume larger rise from 139.87 to 100% projection of 146.58 to 153.26 from 149.37 at 156.05. Break there will pave the way to 158.85 key structural resistance.

In the bigger picture, current development suggests that corrective pattern from 161.94 (2024 high) has completed with three waves at 139.87. Larger up trend from 102.58 (2021 low) could be ready to resume through 161.94 high. On the downside, break of 145.47 support will dampen this bullish view and extend the corrective pattern with another falling leg.

Daily Pivots: (S1) 1.3023; (P) 1.3038; (R1) 1.3067; More...

Intraday bias in GBP/USD is turned neutral with current recovery, and some consolidations would be seen above 1.3008. But risk will stay on the downside as long as 1.3247 support turned resistance holds. Below 1.3008 will resume the fall from 1.3787 and target 61.8% retracement of 1.2099 to 1.3787 at 1.2744 next. Sustained break there will pave the way to 1.2099 support next.

In the bigger picture, the break of 55 W EMA (now at 1.3185) is taken as the first sign that corrective rise from 1.0351 (2022 low) has completed. Decisive break of trend line support (now at 1.2780) will solidify this case and target 38.2% retracement of 1.0351 to 1.3787 at 1.2474 next. Meanwhile, in case of another rise, strong resistance should emerge below 1.4248 (2021 high) to cap upside to preserve the long term down trend.

Daily Pivots: (S1) 0.8079; (P) 0.8102; (R1) 0.8124; More…

A temporary top was formed at 0.8123 after USD/CHF hit 100% projection of 0.7828 to 0.8075 from 0.7872 at 0.8119. Intraday bias is turned neutral first. On the upside, firm break of 0.8123 will extend the corrective rally from 0.7828 to 138.2% projections at 0.8213. On the downside, sustained break of 55 D EMA (now at 0.8002) will argue that the corrective bounce has completed and bring retest of 0.7828 low.

In the bigger picture, 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. In any case, outlook will stay bearish as long as 0.8332 support turned resistance holds (2023 low).

Daily Pivots: (S1) 0.6472; (P) 0.6493; (R1) 0.6526; More...

Intraday bias in AUD/USD is turned neutral first with current recovery. Fall from 0.6706 could still extend lower, but strong support would likely be seen from 0.6413 cluster (38.2% retracement of 0.5913 to 0.6706 at 0.6403) to bring rebound. Above 0.6616 will bring retest of 0.6706. However, sustained trading below 0.6403/13 will carry larger bearish implications.

In the bigger picture, there is no clear sign that down trend from 0.8006 (2021 high) has completed. Rebound from 0.5913 is seen as a corrective move. Outlook will remain bearish as long as 38.2% retracement of 0.8006 to 0.5913 at 0.6713 holds. Break of 0.6413 support will suggest rejection by 0.6713 and solidify this bearish case. Nevertheless, considering bullish convergence condition in W MACD, sustained break of 0.6713 will be a strong sign of bullish trend reversal, and pave the way to 0.6941 structural resistance for confirmation.