Today’s pound, gold and oil prices in focus: commodity and currency check, 17 October

Sterling continues to lose ground against the dollar in early European trading, losing 0.1% to $1.2987 at the time of writing. The pound remains firmly below the psychologically significant 1.3000 level and hovering near its lowest point since August 20.

The GBP/EUR exchange rate experienced a significant decline on Wednesday after UK inflation figures fell well short of expectations. This disappointing data has prompted market participants to increase bets on a potential interest rate cut by the Bank of England before the end of the year.

Market dynamics suggest a pronounced tilt in favour of bearish traders, indicating that the most likely trajectory for the pair is downward.

Read more: FTSE 100 LIVE: European stocks rise and euro falls ahead of ECB interest rate decision

“GBP/USD’s tumble through the September low at $1.3022 and the $1.3000 mark following a weaker-than-expected UK inflation print changed our weekly outlook to a bearish one with the $1.2793-to-$1.2665 region being targeted. The tentative April-to-October uptrend line at $1.2898 represents the next downside target,” said Alex Rudolph, market analyst at IG.

Sterling rebounded from recent lows against the euro (GBPEUR=X), climbing 0.1% to €1.1964 at the time of writing, as traders await the European Central Bank’s (ECB) interest rate decision.

Gold prices surged to a record high on Thursday, climbing in anticipation of US economic data releases later in the day, while traders closely monitor a tightening presidential race that has bolstered demand for safe-haven assets.

At the time of writing, spot gold was trading at $2,681.73 per ounce, reflecting an increase of 0.2%. Meanwhile, US gold futures rose 0.2% to $2,697.60.

Since the beginning of the week, gold has gained approximately 1%, as investors reposition their portfolios ahead of the US election, which is less than three weeks away.

Trump’s potential return to office is viewed as inflationary, contributing to the drop in Treasury yields and pushing the dollar to its strongest levels since early August.

Read more: Capital gains tax a sticking point for UK business ahead of budget

With both presidential candidates presenting different economic risks, gold is expected to continue attracting support regardless of whether Donald Trump or Kamala Harris emerges victorious.

Oil prices experienced a slight drop during early European trading session, after bouncing back from recent steep losses. The drop followed the release of industry data indicating an unexpected decline in US oil inventories, which bolstered market sentiment.

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Brent crude futures slipped 0.1%, settling at $74.14 a barrel, while US West Texas Intermediate (WTI) (CL=F) crude lost 0.2% higher to $70.26 per barrel during early European trading.

Oil markets remain on high alert due to escalating tensions in the Middle East, particularly concerns surrounding Israel’s potential retaliation against Iran. However, reports suggest that Israel may refrain from targeting Iran’s oil and nuclear facilities, which has alleviated some fears of a significant conflict escalation.

Additionally, oil prices are being influenced by weak demand signals from China, the world’s largest oil importer. Although recent fiscal stimulus measures have been announced by Beijing, the government has yet to provide specific details regarding the scale and timing of these initiatives, leaving the market uncertain about future demand prospects.

Meanwhile, the FTSE 100 (^FTSE) was muted at the open, trading at 8,325 points. For more details check our live coverage here.

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