Pound (GBPUSD=X)

The pound was lower against the dollar in early European trading, down 0.1% to $1.2752, as investors awaited key US inflation data for November, which will be released later on Wednesday.

The inflation report is expected to show that the annual headline CPI accelerated at a faster pace to 2.7% from the prior release of 2.6%. Core CPI, which excludes volatile food and energy prices, is expected to rise by a steady 3.3%. On a month-on-month basis, both headline and core inflation are forecasted to grow by 0.2% and 0.3%, respectively.

Unless the figures deviate markedly from expectations, analysts do not foresee a significant shift in market sentiment regarding the Federal Reserve's policy outlook. According to the latest Reuters poll, 90% of economists expect that there will be a 25-basis points interest rate reduction next week.

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Meanwhile, sterling pushed higher against the euro (GBPEUR=X), trading at €1.2133 amid strong expectations that the European Central Bank (ECB) will cut interest rates further this week, as Europe’s major economies struggle for momentum.

Nadia Gharbi, senior economist at Pictet Wealth Management, expects the ECB to deliver a series of rate cuts until mid-2025, ultimately bringing the main policy rate down to 1.75%.

Gold (GC=F)

Gold prices climbed to a two-week high of over $2,700 per ounce on Wednesday as traders rushed to the safe-haven metal ahead of US inflation figures and amid escalating tensions in the Middle East.

Spot gold rose 1%, trading at $2,690.83 per ounce, while US gold futures increased by 0.3%, reaching $2,728,40 at the time of writing.

"The spot gold price surged yesterday and has continued to recover from the higher low formed in November, and from the brief selloff on 25 November," Chris Beauchamp, chief market analyst at IG, said.

​"The past week saw the price consolidate around 2630, and this has resolved into a renewed push higher. Further gains target the $2720.00 high from 25 November, and then on to $2790.00, the late October peak," he added.

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Gold could extend its record run into 2025 as further interest rate cuts from major central banks and the prospect of a weaker dollar will boost demand for the safe-haven asset, Heraeus Precious Metals said on Tuesday.

Heraeus expects gold prices to range from $2,450 to $2,950 per ounce in 2025, influenced by continued buying by major central banks, albeit in lesser quantities than in 2024, geopolitical risks in Ukraine and the Middle East.