![\"\"](\"\/wp-content\/uploads\/2025\/12\/image-63.png\")
<\/figure>\n\n\n\nGBP \u2013 BoE expected to cut rates<\/h2>\n\n\n\n
The pound sent some mixed signals in the past week as it strengthening against the USD, and JPY, yet is in the reds against the EUR. In the coming week, we highlight the release of BoE\u2019s interest rate decision, next Thursday as a key event for pound traders. The bank is expected to cut rates by 25 basis points and currently GBP OIS imply a probability of 92.2% for such a scenario to materialise. Yet GBP OIS also imply that the market expects the bank to proceed with another rate cut in 2026, one only, which tends to imply that the market\u2019s expectations for the bank\u2019s intentions continue to lean on the dovish side. We note that the bank is at cross roads as on the one hand, inflation remains high providing hawkish innuendos for the bank, yet on the other hand, growth remains anemic adding pressure on the bank to ease its monetary policy further. Hence should the bank cut rates as expected we intend to turn our focus to the bank\u2019s forward guidance. Should the bank imply in its forward guidance imply that more easing lays ahead for its monetary policy we may see the pound retreating, while a more hawkish tone could provide some support for the sterling. Also we intend to keep a close eye on the votes in favour of a rate cut and the ones favouring the bank remaining on hold as it would allow a deeper insight in the balance of power between doves and hawks. On a macroeconomic level, we note two releases which we consider key. The first would be the release of October\u2019s employment data on Tuesday, and a possibly tighter than expected UK employment market could provide some support for the pound. Also on Wednesday, we get UK\u2019s November CPI rates and a possible acceleration could provide some support for the pound ahead of BoE\u2019s interest rate decision next Thursday.<\/p>\n\n\n\n
Analyst\u2019s opinion (GBP)<\/p>\n\n\n\n
The pound over the past few days seemed to be gaining some support against its counterparts, yet its direction in the next week may prove difficult to predict. BoE\u2019s interest rate decision, the release of inflation and employment data all tends to cloud the path of the pound. A possible rate cut and a subsequent dovish forward guidance from the BoE could weigh on the sterling, as could a possible easing of inflationary pressures and a looser employment market.<\/p>\n\n\n\n JPY sent some mixed signals this week as it remained relatively stable against the USD, yet lost ground against the GBP and EUR. In the coming week, BoJ\u2019s interest rate decision may prove the main event for JPY traders. The bank is expected to hike rates by 25 basis points and currently JPY OIS imply a probability of 79.8% for such a scenario to materialise and also imply that the market expects the bank to continue hiking once maybe twice in the coming year. We are a bit more conservative and expect one more rate hike in the coming year, yet the overall idea here is that the market\u2019s expectations are leaning on the hawkish side after next Friday\u2019s interest rate decision. At this point we have to note that the bank\u2019s hawkish intentions had faced headwinds from the Japanese Government. Yet the weakening of JPY against the USD since the midst of September and the relative inflationary pressures may allow the Japanese government to tolerate a possible rate hike, yet the negative growth for Q3, tends to add more pressure on the bank to keep rates low. It should be noted that BoJ Governor Ueda seems to be a firm supporter of higher rates, and has stated recently that the Japanese economy has weathered the shock of US tariffs, a statement that could allow the bank to proceed with a rate hike next Friday. Hence our base scenario is that the bank is to hike rates on Friday and we also expect the bank to issue a forward guidance possibly leaning on the hawkish side and both elements could provide support for the JPY. On a macro level, we note the release of Japan\u2019s Tankan indexes for Q4 and November\u2019s CPI rates next Friday with the latter probably being overshadowed by BoJ.<\/p>\n\n\n\n Analyst\u2019s opinion (JPY)<\/p>\n\n\n\n We highlight the release of BoJ\u2019s interest rate decision as the highlight for JPY traders next week and a rate hike in combination with a possibly hawkish forward guidance could provide some support for the Yen.<\/p>\n\n\n\n The common currency has strengthened against the USD, the JPY and the pound in a sign of wider strength. In the coming week the main event for EUR traders is expected to be the ECB\u2019s interest rate decision next Thursday, yet before that we note the release of Euro Zone\u2019s preliminary PMI figures for December next Tuesday. The indicators are expected to provide a picture for the level of economic activity and we intend to focus on the indicators for Germany\u2019s manufacturing sector, France\u2019s services sector and for a rounder view the composite index of the Euro Zone as a whole. Main point of worries is the contraction of economic activity for Germany\u2019s manufacturing sector. Overall should we see economic activity in the Zone deteriorating we may see the common currency weakening. Back to ECB\u2019s interest rate decision the bank is widely expected to remain on hold and the market expects the bank to keep rates on ice until the end of next year. Should we see the bank also in tis forward guidance, with \u201cforward guidance\u201d including ECB President Lagarde\u2019s press conference, verifying such market expectations, we may see the EUR getting some support. Also on a more fundamental level, we note the negotiations for a possible peace plan in Ukraine and a possible break through or reports of progress could provide some support for the single currency.<\/p>\n\n\n\n Analyst\u2019s opinion (EUR)<\/p>\n\n\n\n On a macro level we note the release of the preliminary PMI figures for December of Germany, France and Euro Zone as a whole. A possible easing of economic activity could weigh on the EUR. On a monetary level, we highlight the release of the ECB\u2019s interest rate decision and should the bank enhance the market\u2019s expectations for the bank remaining on hold for a longer period we may see the EUR getting some support.<\/p>\n\n\n\n The Aussie continues to be in the greens for a third week in a row against the USD. In the coming week on a macroeconomic level, we note that November\u2019s employment data sent some mixed signals, as the employment change figure dropped into the negatives while the unemployment rate ticked down and the release tended to weigh on the Aussie at the time. In the coming week we note the release of the December preliminary PMI figures and an expediting of the expansion of economic activity could provide some support for the Aussie. On a monetary level RBA decided to remain on hold and RBA Governor Bullock clearly showcased that the rate hike option is on the table, turning the decision into a hawkish standing pat. In the coming week, we note that we have a couple of RBA policymakers scheduled to make statements on Monday and Tuesday and a possible hawkish tone could provide some support for AUD. On a more fundamental level, we note that the Aussie could benefit from a more optimistic, risk on approach by the markets given that it\u2019s considered a riskier asset in the FX market as it\u2019s considered a commodity currency. Also given the close Chinese-Australian ties, we may see Aussie traders keeping a close eye on developments in China. Please note that on Monday we get a number of interesting financial data from China, including the house prices, industrial output, retail sales and urban investment growth rates all being for November. A possible acceleration of the rates could also provide some support for AUD.<\/p>\n\n\n\n Analyst\u2019s opinion (AUD)<\/p>\n\n\n\n RBA\u2019s hawkish on hold tended to be supportive for AUD, and hawkish comments by RBA policymakers in the coming week could provide some support for the Aussie. In the coming week we may see fundamentals leading the Aussie given the light calendar in regards of financial releases and a possible risk on market sentiment could provide some support for the Aussie.<\/p>\n\n\n\n Also the Loonie continued to strengthen against the USD for a third week in a row. The Canadian Dollar lost some ground at the time of the release of BoC\u2019s interest rate decision yet started to strengthen afterwards. Overall, the market\u2019s expectations for the bank to remain on hold until September and then hike rates remained unchanged, is a scenario that tends to be supportive for the Loonie, especially should one compare the monetary policy outlook of BoC with the Fed. In the coming week we highlight the speech of BoC Governor Tiff Macklem next Tuesday at the Chamber of Commerce of Metropolitan Montreal and any hawkish comments could provide some support for the Loonie. On a macroeconomic level, we note that the release of the CPI rates for November on Monday and a possible acceleration of the rates could provide some support for the CAD. Also we note the release of December\u2019s business barometer, and retail sales growth rate for October on Thursday and Friday respectively which could provide some volatility for the CAD. On a more fundamental level, we note the drop of oil prices for the week and given the status of Canada as a major oil producing economy, a continuation of the bearish tendencies for oil prices could weigh on the CAD.<\/p>\n\n\n\n Analyst\u2019s opinion (CAD)<\/p>\n\n\n\n In the coming week we highlight the release of Canada\u2019s October CPI rates on Monday and a possible acceleration of the rates could provide some support for the CAD. On a monetary level, we may see also BoC Governor Macklem\u2019s speech next Tuesday and any hawkish comments could also provide some support for the CAD<\/p>\n\n\n\n Overall and as an epilogue, we expect the USD to maintain its dominance in the FX market. The frequency and gravity of high impact US financial releases in conjunction with planned comments of Fed policymakers, may keep interest in the FX Market revolving around developments in the US and the greenback. Nevertheless, there also high impact release from other economies that may allow other currencies to come under the spotlight, thus creating a more balanced trading mix in the FX market. As for US equities, we tend to get mixed signals, with Netflix, Warner Bros and Paramount, as well as Oracle being the highlights in the past few days. At this point we note that our main worries are for the slump of Oracle\u2019s share price, as it was a painful reminder of the scenario of a possible bubble existing in the US equity markets, especially among tech companies, as investments in AI may take longer than expected to boost profitability. The market worries are intensified as the tech sector is highly leveraged, increasing the risk factor. A more positive market sentiment may provide some support for US stock markets in the coming week, while should worries intensifying we may see US equities retreating. At the same time the weakening of the USD seems to have finally kicked in, providing some support for gold\u2019s price. We still consider the market\u2019s dovish expectations for the Fed\u2019s intentions as a key factor underpinning the rise of the price of the precious metal, while geopolitics, especially in Ukraine and Venezuela could drive safe haven flows for gold\u2019s price.<\/p>\n\n\n\n![\"\"](\"\/wp-content\/uploads\/2025\/12\/image-64.png\")
<\/figure>\n\n\n\nJPY \u2013 BoJ: To hike or not to hike?<\/h2>\n\n\n\n
![\"\"](\"\/wp-content\/uploads\/2025\/12\/image-65.png\")
<\/figure>\n\n\n\nEUR \u2013 ECB expected to keep its monetary policy in \u201ca good place\u201d<\/h2>\n\n\n\n
![\"\"](\"\/wp-content\/uploads\/2025\/12\/image-66.png\")
<\/figure>\n\n\n\nAUD \u2013 Fundamentals to lead the Aussie<\/h2>\n\n\n\n
![\"\"](\"\/wp-content\/uploads\/2025\/12\/image-67.png\")
<\/figure>\n\n\n\nCAD \u2013Canada\u2019s November CPI rates to move the Loonie<\/h2>\n\n\n\n
![\"\"](\"\/wp-content\/uploads\/2025\/12\/image-68.png\")
<\/figure>\n\n\n\nGeneral Comment<\/h2>\n\n\n\n