Pound (GBPUSD=X)

Sterling was just slightly higher against the dollar in early European trading, at 1.3078, barely a 0.1% climb, as the rally appears to have lost momentum.

The dollar is consolidating its recent gains, now at its highest level since 16 August. This strength is supported by increasing expectations of a 25 basis points interest rate cut by the Federal Reserve in November.

These anticipations were bolstered by the minutes from the recent FOMC meeting, which indicated a consensus that such a significant cut would not commit the central bank to a specific pace for future adjustments. As a result, yields on the benchmark 10-year US government bond remain elevated above the 4% threshold, the highest since 31 July.

This upward trend in yields continues to support the dollar and makes it hard for the pound to gain ground against the greenback.

Sterling managed to bounce back against the euro (GBPEUR=X) in early trading, rising 0.2% to €1.1958.

Gold (GC=F)

Gold prices saw a modest increase on Thursday as traders prepared for crucial US inflation data that could influence the Federal Reserve's monetary policy direction.

At the time of writing, spot gold was up by 0.1% at $2,614.45 per ounce, while US gold futures rose 0.1% to $2,628.20.

Analysts anticipate that the upcoming US inflation data will reveal a slight easing in headline CPI, while core CPI remains stubbornly high for September. This persistent inflation, coupled with a robust labour market, diminishes the likelihood of the Federal Reserve implementing significant interest rate cuts in the near term.

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Last week's strong payrolls report contributed to this sentiment, leading traders to fully dismiss expectations for a 50 basis point rate cut by the Fed in November. The minutes from the Fed’s September meeting indicated that while policymakers supported a 50 basis point reduction, they were noncommittal about the pace of future cuts.

A more measured approach to rate cuts could negatively impact gold and other non-yielding assets, as it raises their opportunity costs, making them less attractive to investors.

Oil (BZ=F)

Oil prices saw an uptick in early trading on Thursday, driven by concerns over potential supply disruptions in the Middle East, particularly with Israel signalling intentions to strike oil producer Iran.

Additionally, spikes in fuel demand due to Hurricane Milton, which has made landfall in Florida, further supported prices.

Brent crude futures rose 0.4% to $76.89 a barrel, while US West Texas Intermediate (CL=F) crude climbed 0.7% to $73.75 per barrel during early European trading.

Hurricane Milton, the second major storm to hit the US this season, has already impacted fuel supplies, with around 25% of gas stations in Florida reporting shortages. This surge in gasoline demand has bolstered crude prices amid the storm's disruptions.

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Investor sentiment also remains cautious as tensions escalate between Israel and Iran. Despite these geopolitical concerns, a weak demand outlook looms. The US Energy Information Administration (EIA) recently downgraded its demand forecast for 2025, citing weakening economic activity in China and North America.

Meanwhile, the FTSE 100 (^FTSE) was higher at the open, climbing 0.3% to 8,268 points. For more details check our live coverage here.

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