Asset Summary – Friday, 3 October
GBPUSD is showing signs of stability around the $1.35 mark after a period of gains, although its future direction is uncertain. The upcoming UK budget, with potential tax increases to meet fiscal targets, presents a possible headwind for the pound. However, support may arise from the Bank of England’s monetary policy, with expectations of maintaining current interest rates for an extended period due to persistent inflationary pressures. The anticipated peak in CPI inflation, followed by a gradual decline, suggests a potential strengthening of the pound in the medium term, but concerns remain regarding food and administered price inflation, which could limit its upside.
EURUSD is exhibiting positive momentum. Recent trading shows the euro gaining against the dollar, evidenced by a 0.08% increase to 1.1725 in the latest session. Looking back, this upward trend is further supported by a 0.59% appreciation over the past month. Zooming out, the EURUSD has demonstrated a notable strengthening over the longer term, with a substantial 6.84% rise in value over the past year, suggesting a sustained period of euro outperformance against the US dollar.
DOW JONES is likely to experience continued upward pressure, albeit potentially modest, as US stock futures indicate a positive start following Wall Street’s recent record highs. The technology sector’s strong performance, fueled by enthusiasm for artificial intelligence and significant gains in companies like Nvidia, AMD, and Intel, is a key driver. OpenAI’s substantial valuation and partnerships with South Korean chipmakers further boost investor confidence. However, political uncertainty surrounding the government shutdown and the delayed release of key economic data, such as the nonfarm payrolls, could introduce some volatility and temper gains.
FTSE 100 experienced mixed trading signals. A decline in Experian’s value, triggered by concerns about potential earnings reduction due to Fair Isaac’s new program, exerted downward pressure. However, this was partially counteracted by positive momentum from Tesco, driven by increased sales and raised profit forecasts, and 3i Group, boosted by speculation surrounding a potential lucrative sale of Evernex. These countervailing forces contributed to a relatively stable day for the index, preventing a significant drop despite the negative impact from Experian.
GOLD is experiencing upward price pressure, nearing a seventh straight week of gains, fueled by its attractiveness as a safe investment amidst economic uncertainties. The U.S. government shutdown and potential delays in key economic data are contributing to this demand. While recent private sector data suggests a cooling labor market, reinforcing expectations for future Federal Reserve rate cuts that typically benefit gold, caution from within the Fed regarding rate reductions introduced some downward pressure. Overall, the interplay of safe-haven buying and dovish monetary policy expectations appears to be the dominant influence on gold’s current trading pattern.