On Monday, the British pound maintained its stability against the US dollar, trading at $1.2619. This came after a significant drop on Friday, which led it to reach its lowest level in four months. The pound's slight recovery was underpinned by a weaker dollar, as the post-election rally in US markets began to lose steam.
Short-Lived Resilience and Inflation Concerns
Although the pound has shown some resilience recently, it may not last long. Investors are preparing for the release of the UK's latest inflation figures later this week. If inflation remains high, it could raise concerns about the Bank of England's tightening policy, which might have a negative impact on the currency.Against the euro (GBPEUR=X), sterling remained flat, trading at €1.1968. Jane Foley, senior FX strategist at Rabobank, stated, "The pound continues to hold its own vs. the EUR. We still expect that EUR/GBP is likely to edge to the 0.8150 level over a 12-month period."The euro is also facing challenges. Political uncertainty in Germany and concerns about US tariffs under the next Trump administration are weighing on the single currency. Additionally, if UK inflation and upcoming PMI data fail to meet market expectations, the pound's prospects against the euro could face new difficulties.Gold Prices and the Dollar's Rally
On Monday, gold prices experienced a modest increase after a sharp decline last week. This was due to the faltering of the US dollar's recent rally. Traders are now looking forward to remarks from Federal Reserve officials later this week to gain more insights into the US interest rate outlook.Spot gold rose slightly by 0.1% to $2,588.28 per ounce, while US gold futures edged 0.6% higher to $2,586.30 at the time of writing. The US dollar index (DX-Y.NYB), which surged 1.6% last week, pulled back slightly, reducing the pressure on gold. A weaker dollar makes gold more affordable for holders of other currencies, thereby boosting the demand for the precious metal.However, gold prices have struggled to break through the key $2,600 level since last week. Market participants are factoring in expectations of a more cautious approach by the Federal Reserve in cutting interest rates.After a strong rally over the past year, gold gained nearly 30% in value and reached an all-time high of $2,790.15 in late October. During this period, investors sought safe-haven assets due to global economic uncertainties.Oil Prices and Global Market Trends
During early European trading, oil prices were slightly lower. Concerns about slowing fuel demand in China and a projected global oil surplus limited the previous gains achieved over the weekend. The conflict in Ukraine escalated, with Russia launching its most extensive airstrike on Ukraine in nearly three months. This attack caused significant damage to Ukraine's power infrastructure, increasing geopolitical uncertainty and drawing attention to potential disruptions in global energy markets.However, these concerns were mitigated by ongoing worries about China's economic slowdown. Recent data from the world's largest oil importer showed a 4.6% drop in refinery throughput in October compared to the same month last year. Factory output in China also grew at a slower pace, dampening expectations for a strong recovery in fuel demand.The global oil market is also being weighed down by forecasts from the International Energy Agency (IEA). Last week, the IEA warned that global oil supply could exceed demand by more than 1 million barrels per day by 2025, even if OPEC+ maintains its current production cuts. This projection, combined with weak data from China, led to a more than 3% decline in both Brent and WTI prices last week.The FTSE 100 and Market Performance
The FTSE 100 (^FTSE) opened higher, climbing 0.2% to 8,075 points. For more detailed information, please check our live coverage here. You can also download the Yahoo Finance app, which is available for both Apple and Android devices.