Pound (GBP/USD)
The British pound slipped against the US dollar on Friday, reversing a slight rally from the previous day. It was down by 0.2%, trading at $1.286 as investors continued to assess a busy week of events.
The US dollar saw strength following Donald Trump’s election victory, which boosted expectations for his economic policies. Additionally, both the Federal Reserve and the Bank of England made key interest rate cuts.
“Trump trades are unwinding slightly in some areas—especially the US dollar, which has eased off a bit after the Fed’s announcement. The Federal Reserve wasn’t as hawkish as some expected,” said Neil Wilson, chief market analyst at Finalto.
Despite the US dollar’s rise, there is little immediate impact on inflation, even if concerns over potential tariffs persist. The pound held steady against the euro, trading almost flat at 1.20.
Gold (GC=F)
Gold continued its downward trend on Friday, losing 0.4% in early European trading to $2,694 per ounce. Analysts attribute this decline to a stronger US dollar and uncertainty about the geopolitical consequences of a Trump administration.
“Much of the sell-off in gold can be linked to the strength of the US dollar,” said David Morrison, senior market analyst at Trade Nation. “This surge in the dollar followed expectations that Trump’s tariffs and tax cuts would spark inflation, leading bond yields to spike. Since then, both the dollar and bond yields have returned to more reasonable levels, helping gold stabilize.”
Other analysts suggest that profit-taking may be contributing to the weaker gold prices after a recent strong rally.
“Gold prices are set to record their first negative week in more than four weeks, indicating that traders are booking profits,” said Naeem Aslam, chief investment officer at Zaye Capital. “However, the long-term uptrend for gold remains intact, making any price retracement attractive to bargain hunters.”
Oil (BZ=F, CL=F)
Oil prices slipped on Friday after a volatile week influenced by the US election. Investors are trying to anticipate the potential policy actions of President-elect Trump when he takes office in January, particularly regarding oil production.
Trump has pledged to reduce Iranian and Venezuelan oil output and prioritize US oil exploration. His climate-related policies are also in focus, with expectations that his return to power may slow the global transition to green energy.
By lunchtime in London, Brent crude was down 1.1%, trading at $74.78 per barrel. Meanwhile, West Texas Intermediate (WTI) was 1.3% lower, priced at $71.42.
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