The Market Is Nervous, but the FOMC Remains Calm

EUR/GBP

Key zone: 0.8800 - 0.8850

Buy: 0.8850 (on strong positive fundamentals) ; target 0.9000; StopLoss 0.8800

Sell: 0.8770 (on a confident breakout of the 0.8800 level) ; target 0.8650-0.8600; StopLoss 0.8820

Judging by recent statements from officials, most FOMC members lean toward leaving the key rate unchanged in December. Yet the basis for such confidence remains unclear.

Reminder: the final FOMC meeting of the year will be held on December 10. Powell consistently emphasizes that the decision will be based solely on available data.

Logically, the Fed wants to obtain a full set of reports on inflation, employment, and the labor market for September, October, and November. But there is almost no time for analysis: 10 days before the meeting, the “blackout period” begins, during which officials can no longer comment.

However, collecting all data on time appears impossible.

• Tomorrow’s NFP and unemployment reports for September are outdated and irrelevant for markets.
• October fell during the shutdown — data for the month may be missing entirely or unreliable.
• September PPI will be published only on November 25.
• Import and export price data for September — no earlier than December 3.
• October CPI will be released on December 10, meaning it cannot influence the Fed’s decision.

As a result, the only truly meaningful report the Fed can receive on time is November NFP. If the labor market does not show a sharp deterioration, most FOMC members will likely oppose a rate cut in December.

Against this backdrop, confidence in any rate forecasts remains minimal.

Meanwhile, markets have no shortage of other developments. The recovery of EUR/GBP stalled below 0.8820 after the release of UK inflation data. Retail traders are actively limiting risk, restraining euro bulls.

Annual and core CPI readings point to easing inflationary pressure, but the positive monthly dynamics signal persisting price risks. For the BOE, this is a reason to maintain caution.

Chancellor Rachel Reeves is considering measures to protect small businesses from rising tax burdens. The budget will be presented on November 26, and Reeves faces a complex task — closing the fiscal gap while convincing the bond market that tax decisions will strengthen the UK economy.

For GBP to strengthen, it is crucial that the new budget does not trigger aggressive BOE rate cuts. The task is difficult, but most of the negative factors are already priced in, making large speculative swings in GBP unlikely at this stage.

So we act wisely and avoid unnecessary risks.

Profits to y’all!