Bank of England policymaker Catherine Mann warned in her speech today that despite signs of weakening consumption, monetary policy must remain restrictive. She argued that high inflation has damaged UK consumers and continues to suppress spending.

“If the consumption gap were my only concern, then reducing monetary policy restrictiveness would be appropriate,” she said. “However, given rising inflation and expectations, maintaining a restrictive stance for longer is appropriate.”

Mann noted that the Bank’s analysis points to two drivers behind the consumption gap: First, inflation and consumer scarring; Second, the channels through which monetary policy affects consumption.

She explained that the former reflects the lingering effects of rapid price increases, which have eroded purchasing power and altered household behavior. “High inflation itself is the root cause of income uncertainty and weak consumption growth,” she said. “Monetary policy needs to remain focused on lowering inflation so that households can return to a sustainable spending pattern.”

As for the second point, she emphasized that higher interest rates have already created a significant drag on demand and that the tightening impact is beginning to fade. “Monetary policy has indeed eased,” Mann said, adding that its effect on consumption has already peaked.

The pound has gained nearly 3% this week, but Thursday’s rally appears to have slowed. The pair failed to hold above 205.00, and technical indicators are turning lower, suggesting the possibility of a pullback.

In addition, Sanae Takaichi’s victory in the ruling party election has intensified speculation over looser fiscal policy and dampened expectations for imminent tightening by the Bank of Japan, weighing on the yen.

However, technical signals show that all factors for a bearish correction in GBPJPY are now present. The pair has reached strongly overbought levels across most timeframes, and the 4-hour MACD lines have crossed below the signal line, indicating strengthening downside pressure.

On the downside, a break below the minor support at 203.87 would turn the intraday bias neutral and likely lead to consolidation. Still, as long as 201.24 holds as support after turning from resistance, the broader outlook remains bullish.

On the upside, immediate resistance lies at Wednesday’s high of 205.35. The trendline resistance is at 206.15, while the 161.8% Fibonacci retracement of the October 7–8 rally stands at 207.56.

Trade Direction: Buy

Entry Price: 199.50

Target Price: 208.98

Stop Loss: 197.30

Valid Until: October 24, 2025 23:55:00

Support: 203.87 / 201.24 / 200.54

Resistance Levels: 205.35 / 206.15 / 207.56

The macro backdrop that has underpinned gold’s pro-cyclical uptrend is twofold: persistently above-target U.S. inflation (inflation-hedge bid); a widening “debasement trade” as investors price escalating fiscal imbalances in the world’s largest economies, expressed through rising fiat-currency discount factors.

Gold’s breach of the $4,000 psychological magnet was catalyzed by these structural drivers. However, within the dominant bullish impulse, levered speculative accounts periodically rebalance gamma and delta exposure, producing multi-day mean-reversion price action.

At this juncture, gold’s seven-week bullish acceleration has reached a statistical extreme relative to its moving averages, the typical trigger for an intra-trend mean-reversion correction. The subsequent pull-back has intensified downside convexity, amplified by profit-taking flows posted after the psychological breach of $4,000.

Meanwhile, EM assets have started October on a soft note, with currencies trading choppy inside well-worn ranges as the USD outperforms across the board.

Geopolitical tail-risk premia have compressed following cease-fire headlines in the Israel–Hamas theatre, eroding the safe-haven bid for EM carry trades. Despite the ongoing U.S. budget impasse, the DXY is on track for its strongest weekly close since November—an early crack in this year’s consensus short-USD positioning.

After spot gold pierced the $4,000 psychological magnet and printed a record $4,059 on Wednesday, profit-taking flows triggered a tactical pullback. Although the daily candle completed a bearish-engulfing formation, the retracement has so far been shallow. The broader bullish structure remains intact, so the current loosening is expected to offer a more favourable entry point within the dominant up-trend. The RSI has held stubbornly above 60.00, preserving upside momentum.

A sustained break above $4,030 would open the Fibonacci-extension target at $4,100. The former resistance-turned-support zone around the 2 Oct high of $3,900 is the first critical inflection level.

Trade Direction: Sell

Entry Price: 4015

Target Price: 3659

Stop Loss: 4058

Valid Until: October 25, 2025 23:55:00

Support: 3952 / 3940 / 3930

Resistance Levels: 4006 / 4017 / 4029

West Texas Intermediate (WTI) crude oil extended its decline for a second straight session on Friday, surrendering all of its gains from earlier in the week as selling pressure gathered pace across the energy complex. The U.S. benchmark was last seen trading near $59.80 per barrel, after briefly slipping to $59.21, its lowest level since May 8. On the day, WTI has fallen more than 2%, and it is on track for a second consecutive weekly loss, reflecting a broader unwinding of geopolitical risk premiums and renewed concerns over global demand.

The latest bout of weakness comes amid signs of diplomatic progress in the Middle East, where Israel and Hamas have formally endorsed the initial phase of a peace framework aimed at easing tensions in the Gaza Strip. Under the deal, Israel will begin a partial troop withdrawal while Hamas is expected to release the remaining hostages captured in last year’s conflict. The development, viewed as a major step toward regional de-escalation, has helped calm oil traders’ nerves and erase much of the geopolitical risk premium that had built up over the past several months.

“The geopolitical bid in oil prices has effectively evaporated,” said one market analyst. “Traders are now rebalancing toward fundamentals—sluggish demand growth, rising inventories, and a resilient U.S. dollar—all of which continue to weigh on the near-term outlook for crude.”

Indeed, the recent peace progress comes at a time when U.S. inventory data has been less than supportive. Reports from the Energy Information Administration (EIA) showed a surprise build in crude stockpiles this week, adding to concerns that demand from refineries and industrial consumers remains tepid. Meanwhile, the stronger U.S. dollar, buoyed by resilient U.S. economic data and expectations that the Federal Reserve will take a cautious path toward monetary easing, has further pressured commodity prices denominated in greenbacks.

From a technical perspective, WTI’s breakdown below key short-term support levels has accelerated bearish momentum. The price has decisively exited its previous bullish corrective channel, suggesting a shift in market structure toward a deeper retracement phase. WTI continues to trade below its 50-day Exponential Moving Average (EMA50), which now acts as a ceiling of resistance around the $62.50 mark. The sustained move under this indicator is reinforcing negative sentiment, while momentum oscillators such as the Relative Strength Index (RSI) are flashing persistent bearish signals, suggesting that sellers remain firmly in control.

Market analysts warn that unless WTI can reclaim the $61.00–$62.00 zone soon, the door remains open for a further test of the next psychological support at $58.50, followed by $57.70, levels not seen since early spring. On the upside, any recovery attempts are likely to face heavy selling pressure near $61.80–$62.50, where a cluster of moving averages and previous swing highs converge.

SELL WTI

ENTRY PRICE: 60.00

STOP LOSS: 64.00

TAKE PROFIT: 57.70

The British Pound–Japanese Yen (GBP/JPY) cross extended its decline for a second consecutive session on Friday, pulling further away from the seven-month highs seen earlier this week near 205.30. The pair was last trading around 203.25, down roughly 0.20% on the day, as traders reassessed Japan’s evolving political landscape and its implications for monetary policy. Despite the latest pullback, GBP/JPY remains on course for solid weekly gains, underscoring the tension between Japan’s fiscal uncertainty and the United Kingdom’s relatively stable policy outlook.

The latest bout of weakness in the pair comes in the wake of Sanae Takaichi’s surprise victory in the Liberal Democratic Party’s (LDP) leadership race last weekend—a development that sets her on track to become Japan’s first female prime minister. Markets initially interpreted her win as a sign of potentially more expansionary fiscal policies, given her history of supporting government stimulus to spur domestic growth. This sparked speculation that the Bank of Japan (BoJ) might delay further interest rate hikes, prompting a notable selloff in the Yen earlier in the week as investors anticipated looser fiscal-monetary coordination.

However, the tone shifted midweek after Takaichi struck a more cautious note on currency stability. In her first major comments following the leadership result, she stated that “excessive declines in the Yen are undesirable,” signaling some concern about recent depreciation pressures. Her remarks were reinforced by Finance Minister Shunichi Kato, who emphasized that authorities would “monitor for excessive fluctuations and disorderly movements” in the foreign exchange market. These statements served as a form of verbal intervention, offering temporary relief for Yen bulls and helping the currency recover modestly from its earlier lows.

Adding to the mixed policy signals, economic advisors close to Takaichi—including Etsuro Honda and Takuji Aida—indicated that the incoming government would likely tolerate a rate hike by the BoJ either in December or January. With inflation running above the BoJ’s 2% target for over three years and Japan’s economy logging five consecutive quarters of growth, some policymakers see room for additional tightening despite fiscal expansion plans. This evolving narrative has introduced new uncertainty into Yen trading, as markets weigh the balance between stimulus-driven growth and inflation-containment priorities.

The cautious global market mood ahead of key U.S. data has also added to the Yen’s appeal as a safe-haven asset, amplifying downside pressure on GBP/JPY. Risk appetite remains subdued as traders brace for next week’s U.S. inflation figures and further clarity on the Federal Reserve’s policy trajectory, both of which could impact cross-asset sentiment.

Still, the downside for GBP/JPY appears limited in the near term. The British Pound continues to draw support from expectations that the Bank of England (BoE) will maintain its policy rate at 4.0% for the remainder of 2025, resisting calls for aggressive easing. Recent data indicating sticky inflation and a surprisingly resilient U.K. economy have reduced market bets on near-term rate cuts. With wage growth still strong and service-sector inflation proving stubborn, policymakers in Threadneedle Street are in no rush to pivot dovish—keeping the Pound supported even as global risk sentiment wavers.

From a technical perspective, GBP/JPY’s near-term bias has turned slightly bearish following its sharp rally earlier in the week. The pair is currently hovering close to a key pullback resistance zone near 203.18, which coincides with the 38.2% Fibonacci retracement of the recent upswing. A sustained failure to reclaim this level could invite renewed selling pressure toward 202.12, where an overlap support area aligns with the 38.2% retracement of the prior advance. On the upside, any recovery attempts could meet stiff resistance around 204.50, just below the 78.6% Fibonacci level, which serves as an ideal stop-loss threshold for bearish setups.

SELL GBPJPY

ENTRY PRICE: 202.80

STOP LOSS: 204.50

TAKE PROFIT: 201.00

The Australian Dollar drifted lower against the U.S. Dollar on Friday, edging toward the 0.6550 level during the late European trading session as risk sentiment remained fragile. The Greenback’s resilience has been underpinned by recent political instability in Japan and France, which has encouraged investors to seek safety in the U.S. Dollar despite growing expectations that the Federal Reserve will deliver further interest rate cuts later this year.

The U.S. Dollar Index (DXY), which measures the performance of the Greenback against a basket of six major currencies, was holding near a two-month high around 99.50. This firm tone reflects the cautious stance investors have adopted amid heightened global political tensions and a lack of confidence in risk assets. The Dollar’s strength comes at a time when many expected it to lose momentum following the Fed’s recent policy shift, highlighting that broader risk aversion continues to dominate the narrative in currency markets.

However, the medium-term outlook for the Greenback remains uncertain. According to the CME FedWatch Tool, traders currently see an 81.5% probability that the Federal Reserve will cut interest rates by 25 basis points at each of its remaining two meetings this year. This view is supported by a growing number of Fed officials who have expressed concern about softening labor market conditions and the need to “risk manage” potential downside risks to the economy. San Francisco Fed President Mary Daly emphasized this sentiment on Thursday, saying that the recent weakening in the labor market could become more worrisome if not properly managed, according to Reuters.

Investors will now turn their attention to upcoming U.S. economic releases for confirmation that the economy is continuing to slow. Later in Friday’s session, the preliminary University of Michigan Consumer Sentiment Index and Consumer Inflation Expectations data for October will be released at 14:00 GMT. Market forecasts suggest the sentiment index will fall slightly to 54.2 from 55.1 in September, signaling that U.S. consumers remain cautious amid persistent inflation pressures and lingering uncertainty about the economic outlook.

The next major catalyst for the Australian Dollar will come early next week when the Reserve Bank of Australia (RBA) releases the minutes of its September policy meeting. The RBA left its Official Cash Rate (OCR) unchanged at 3.6% in that meeting, striking a balance between addressing persistent inflation risks and avoiding unnecessary pressure on household spending. RBA Governor Michelle Bullock remarked that while certain components of the monthly Consumer Price Index (CPI) came in slightly higher than anticipated, inflation “is not running away,” a statement that reinforced expectations that the central bank would remain on hold in the near term.

Despite inflation still sitting above the RBA’s target range, recent data has pointed to signs of easing in consumer demand and a gradual moderation in wage pressures. Policymakers appear increasingly confident that inflation will continue to trend lower without the need for further aggressive tightening. Nevertheless, markets remain divided over whether the RBA will eventually join other major central banks in cutting rates in early 2026 if global demand conditions deteriorate further.

From a technical perspective, the AUD/USD pair remains locked in a bearish corrective pattern. Although the pair attempted to stage a modest intraday rebound on Friday to unwind oversold conditions on relative strength indicators, momentum remains weak. The recovery attempts are being capped by the 50-day Exponential Moving Average, a level that has consistently acted as dynamic resistance in recent weeks. As long as the pair trades below this threshold, the broader bias remains to the downside. The market has been trading alongside a descending support trendline, suggesting that the path of least resistance remains lower unless a strong breakout occurs above the 0.6590 area.

The technical setup indicates that the pair’s recent uptick is merely a pullback within a broader downtrend. Price action suggests that sellers may reassert control near the 0.6570 zone, where prior swing highs have repeatedly rejected upside momentum. A failure to hold above this area would likely invite renewed bearish pressure toward the 0.6520 level, which coincides with an overlap support zone just above the 61.8% Fibonacci projection. If this level breaks decisively, a further decline toward the 0.6475 region could follow, extending the pair’s bearish structure.

SELL AUDUSD

ENTRY PRICE: 0.6550

STOP LOSS: 0.6610

TAKE PROFIT: 0.6475

On Friday, the Israeli government approved a ceasefire agreement with Hamas, paving the way for a 24-hour halt to hostilities in Gaza and a 72-hour window for the release of Israeli hostages held in Gaza, despite ongoing Israeli military operations in the besieged territory. ANZ Bank analysts stated in a report that slowing economic growth, rising inflation, shifts in the geopolitical landscape, and diversification of U.S. assets and the dollar will sustain strong investment demand and central bank gold purchases, while further interest rate cuts are likely to support gold prices. Senior analyst Matt Simpson noted, "Volatility in the options market has increased, but gold also offers downside protection during this final phase of the rally. For gold bulls, it appears to be an opportune moment to realize profits. However, I anticipate that the pullback may be limited."

Due to the anticipated prolonged government shutdown in the U.S. extending into next week, the Senate will observe an extended weekend, resuming operations on Tuesday, which sustains risk aversion in the market. Additionally, as traders digest the latest dovish remarks from Federal Reserve policymakers, the decline in Asian equities and the pause in the U.S. dollar's rally have provided support for gold prices. According to Reuters, Federal Reserve Bank of New York President John Williams expressed support for further interest rate cuts this year during an interview with The New York Times. Concurrently, San Francisco Fed President Mary Daly indicated earlier on Friday that the Federal Reserve anticipates additional rate reductions, citing risk management considerations. Following delays in key economic data releases and the absence of monetary policy commentary from Federal Reserve Chair Jerome Powell, market participants are eagerly awaiting the publication of University of Michigan consumer confidence and inflation expectation figures to gain new policy insights and trading impetus. Investors are also monitoring the latest report from The New York Times, which states that despite the ongoing government shutdown, the U.S. Bureau of Labor Statistics remains committed to releasing the September Consumer Price Index (CPI) data.

The 1H timeframe indicates that the Bollinger Bands are opening downward, with the SMAs diverging downward. The price is oscillating along the EMA12 in a descending pattern. The MACD exhibits a death cross, suggesting a weakening of bearish momentum, yet no reversal has occurred, indicating the short-term trend remains bearish. The RSI is at 37, reflecting market pessimism. As long as there is no effective breakout above the EMA12, a decline toward 3927, possibly even 3882, is likely. In the 1D timeframe, the price is oscillating along the EMA12 and the upper Bollinger Band in an upward trend. The MACD has formed a golden cross without signs of diminishing bullish momentum, and the RSI is at 72, entering overbought territory, indicating a high probability of short-term correction. However, as long as the gold price does not break below the EMA12 convincingly, the upward trend remains intact. It is recommended to go long at the lows.

Trading Direction: Buy

Entry Price: 3945

Target Price: 4500

Stop Loss: 3800

Support: 3880, 3800, 3550

Resistance: 4050, 4100, 4500