Pound (GBPUSD=X)

The pound was up slightly against the dollar in early European trading, rising nearly 0.1% to $1.2762, as the latest US inflation data showed that price growth remained sticky in November.

The latest data from Bureau of Labour Statistics showed that the consumer price index (CPI) rose 2.7% year-on-year in November. While this increase matched economist expectations, it still marked a slight uptick from the 2.6% annual gain in prices recorded in October and remained above the US Federal Reserve's 2% inflation target.

This cemented market bets that the Fed will cut interest rates again in its December meeting next week.

Deutsche Bank (DBK.DE) Research's team of macro strategists said: "The CPI print left little doubt among investors that another rate cut will happen next week. Indeed, futures moved up the likelihood of a cut from 86% right before the CPI came out to 99% by the close.

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"It’s true that inflation is still too fast for their liking, but last week’s jobs report also saw a fresh rise in the unemployment rate, so our US economists think that will still enable them to cut next week."

Meanwhile, sterling was little changed against the euro (GBPEUR=X), trading at €1.2143, as investors looked ahead to the European Central Bank's (ECB) latest interest rate decision later on Thursday.

Markets are expecting the ECB to cut their deposit rate by 0.25%, to take it down to 3%.

"Our European economists are also looking for a 25bp cut today, and they expect the doves and hawks to compromise on a mildly dovish evolution in communications," said Deutsche Bank's macro strategists.

Gold (GC=F)

Gold prices dipped on Thursday morning, after climbing earlier in the week, as investors looked ahead to a more uncertain outlook for monetary policy in 2025.

Spot gold was flat, trading at $2,716.56 per ounce, while US gold futures fell by 0.1% to $2,753.20 at the time of writing.

Ewa Manthey, commodities strategist at ING, said: "Lower borrowing costs are positive for gold as the metal doesn’t pay interest."

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"The main question for the gold market now is the pace at which the Fed will ease its policy following Donald Trump’s win in the US presidential election; the inflationary impact of Trump’s policies could lead to fewer rate cuts than previously expected," she added.

Manthey said that ING's team believed there would continue to be positive momentum around gold in the short to medium-term.