commodity and currency check, 21 November [Video] #UKFinance

The pound held steady against the dollar in early European trading, hovering at $1.2641.

Sterling found some support from growing expectations that the Bank of England (BoE) will refrain from cutting interest rates in December, following a surprise uptick in UK inflation.

UK headline inflation exceeded the BoE’s 2% target, with core consumer prices – excluding volatile items – unexpectedly accelerating. Service-sector inflation, closely monitored by BoE officials, also surged, climbing at a faster pace of 5%. These developments have raised expectations that the central bank will maintain its cautious stance on interest rates, rather than loosening policy.

Read more: Rise in UK borrowing leaves Reeves ‘little wiggle room’ on spending

Meanwhile, the US dollar traded in a narrow range as traders scaled back expectations of a Federal Reserve rate cut in December. Markets are pricing in the belief that president-elect Donald Trump’s fiscal policies—focused on trade and tax reform—will be inflationary and growth-oriented, prompting the Fed to adopt a more gradual approach to policy easing.

Federal Reserve governor Michelle Bowman said: “It’s concerning to me that we’re recalibrating policy, but we haven’t yet achieved our inflation goal.”

Looking ahead, UK investors will focus on key data points due out on Friday, including October’s retail sales figures and the preliminary S&P Global/CIPS purchasing managers index (PMI) for November, which could provide further clues on the health of the economy.

Meanwhile, against the euro (GBPEUR=X), sterling was marginally higher, trading at €1.1997.

Gold prices extended their gains for a fourth straight day on Thursday, fuelled by a surge in safe-haven demand as geopolitical tensions, particularly the ongoing Russia-Ukraine conflict, intensify.

Spot gold rose 0.1% to $2,666.88 per ounce, while US gold futures edged 0.5% higher to $2,666.30 at the time of writing.

The escalation of the Russia-Ukraine conflict has rattled markets, prompting investors to flock to gold, a traditional hedge against economic and geopolitical risks.

Recent Ukrainian missile strikes on Russian territory, coupled with US vetoes at the UN Security Council, have stoked global tensions, further driving the demand for gold as a safe store of value.

Kyle Rodda, a financial market analyst at Capital.com, said: “Fears of a broader regional conflict involving nuclear threats are pushing up gold prices.”

Read more: UK house prices rise at faster pace

Gold’s rally is also being supported by a weakening US dollar. As the greenback dips 0.1%, gold becomes more affordable for international buyers. Geopolitical risks, economic uncertainties, and a low-interest-rate environment all bolster the precious metal’s appeal.

Oil prices edged higher on Thursday, with geopolitical concerns surrounding the escalating Russia-Ukraine conflict offsetting the impact of a larger-than-expected increase in US crude inventories.

Brent crude futures rose 1%, trading at $73.50 per barrel, while US West Texas Intermediate (WTI) (CL=F) gained 0.1% to $68.95 per barrel at the time of writing.

“For oil, the risk is if Ukraine targets Russian energy infrastructure, while the other risk is uncertainty over how Russia responds to these attacks,” said ING analysts in a note.

Meanwhile, JPMorgan analysts pointed to a rebound in oil consumption over the past week, driven by stronger travel demand in the US and India, with the latter also showing a notable rise in industrial demand.

Global oil demand in the first 19 days of November is estimated at 103.6 million barrels per day (bpd), up by 1.7 million bpd compared to the same period last year, according to the bank’s analysts.

Both Brent and WTI have gained more than 3% so far this week, supported by the combination of robust demand growth and ongoing geopolitical risks.

In broader market movements, the FTSE 100 (^FTSE) opened higher, climbing 0.3% to 8,109.30 points. For more details check our live coverage here.

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