Market round-up: BoE cuts, Yen rallies, Gold shines

• Pound hit by surprise BoE dovish dissenters

• Yen best performing G10 vs USD this week

• Gold hits fresh record, ↑ 9% YTD

Sterling tumbled on Thursday after Bank of England officials unanimously decided to cut interest rates by 25 basis points.

This move was widely expected but the real surprise came in the form of two officials voting for a jumbo 50 basis-point cut.

GBPUSD fell as low as 1.2360, heading for its largest daily fall since early January as traders boosted bets around deeper rate cuts.

Although the BoE warned that inflation will rise “quite sharply” later this year, traders are now favouring three more rate cuts in 2025.

Beyond the BoE decision, the incoming US jobs report could inject more volatility into the GBPUSD.

Over the past 12 months period, the 6 hours after the US NFP release has seen upward moves for the GBPUSD as much as 0.5% or declines as much as 0.8%.

Looking at the charts, prices are under pressure on the daily timeframe.

• A daily close below 1.2400 may encourage a move towards 1.2310 and 1.2250.

• Should 1.2400 prove reliable support, this may push prices back toward 1.2500.

Yen sits on FX throne this week

The Yen is the best-performing G10 currency vs the USD this week thanks to Trump’s tariff drama and hawkish commentary by a BoJ official.

Bank of Japan’s Naoki Tamura stated that the BoJ needed to hike rates two or more times by early next year to tame inflation.

This has sparked discussion among traders about higher rates in Japan with markets seeing a 45% probability of a 25bp hike by June.

Regarding the technical picture, the USDJPY is turning bearish on the daily charts.

• Sustained weakness below 152.50 could signal a steeper decline toward 151.00.

• Should prices push back above 152.50, a rebound toward the 200-day SMA and 153.20 could be on the cards.

Gold headed for $2900?

The recent decline in gold prices could be the product of profit-taking and an appreciating dollar.

Note: Gold hit a fresh all-time high at $2882 on Wednesday.

Nevertheless, the precious metal has gained over 2% this week, pushing year-to-date gains to nearly 9%. With US-China trade war fears and geopolitical risk sapping risk appetite, gold has room to push higher.

Beyond trade developments, the incoming NFP report on Friday could spell more volatility.

A disappointing jobs print could strengthen the argument around lower US interest rates, boosting gold prices. The same can be said vice-versa.

Looking at the charts, gold remains in a bullish trend.

• A weekly close above $2880 may open the doors to the next psychological level at $2900 and $2950.

• Should prices end the week below $2850, this may signal a decline back to $2815 and $2800.