The Focus
Markets have been dominated by the geopolitical risk presented by events in Israel and neighbouring geographies. Week on week, this has meant that the best performing G-10 currency has been the Swiss Franc benefiting from a safe haven, defensive move. Despite US treasuries taking a breather from their chaotic sell off, the US Dollar has also remained relatively well bid. This is also likely down to the Dollar’s well-established if secondary role as a safe haven currency.
With a data-light calendar from the perspective of the US Dollar this week, the risk perceived by markets from current conditions could be sufficient to allow the Dollar to retrace recent highs. As we wrote yesterday, the potential for global inflationary pressures to be supported by the addition of war surrounding Israel is tangible. The United States’ energy independence and possibility to produce a net energy surplus will limit the extent to which that inflation is imported into the US. Given how fresh the events surrounding Israel are, we are still likely to experience a short-term bias towards the Dollar. This is because interest rate expectations are likely to remain stable whilst the demand for safety will increase more quickly.
The Pound has so far remained relatively stable with attention drawn to other assets as markets react to the humanitarian crises unfolding. Such events are likely to once again create downside risks to current GBP pricing. However, there is the possibility for tomorrow’s release of UK inflation data to outweigh the impact of other macroeconomic selling pressures. This morning, employment data was released showing still highly elevated but decelerating wage and employment trends within the UK. So far, GBPUSD is on the back foot ahead of tomorrow’s possible CPI lifeline.
Discussion and Analysis by Charles Porter
Click Here to Subscribe to the SGM-FX Newsletter
Related Insights
Daily Brief – The Hassett Trade
Charles Porter
Thu 4 Dec 2025
The Hassett Trade Not another one, I hear you say. So far this year we’ve seen bandied around the TACO trade, the Trump put, FOMO trade, the MEGA trade, surely there isn’t another to surface before year end?! Wrong. The so-called Hassett trade is that which is currently pushing the Dollar lower but coming to […]
Daily Brief – A week out
Charles Porter
Tue 2 Dec 2025
A week out Markets are now in their final few trading days ahead of a Fed blackout that will precede the Reserve’s decision next Wednesday. The US government shutdown, despite now feeling like a distant memory, continues to weigh on the Dollar and market pricing in general. In particular, as we approach the decision next […]
Daily Brief – OBR: Oops, Budget Released
Charles Porter
Thu 27 Nov 2025
OBR: Oops, Budget Released Traders who might have been out grabbing a coffee ahead of the planned publication of the UK budget yesterday afternoon would have returned to chaos. Reuters, a popular financial news agency, revealed that although not directly discoverable via a link on their website, the OBR had published its report on Chancellor […]
