As expected, the Fed cut the key rate for the third consecutive time by 25 basis points to 3.75%, the lowest level since November 2022. The next meeting is scheduled for 27–28 January, and policymakers are expected to attempt a pause early next year, with a possible return to further monetary easing if the inflation backdrop is favourable. The Fed’s projections for the near term remain unchanged: borrowing costs are still expected to fall to 3.40% in 2026 and to 3.10% in 2027. On Friday at 09:00 (GMT+2), the market’s attention will turn to November inflation data from Germany, and at 09:45 (GMT+2) from France. Forecasts suggest that Germany’s annual CPI will rise by 2.3%, while the monthly figure will fall by 0.2%. In France, CPI is expected at 0.8% year-on-year and –0.2% month-on-month. However, neutral readings are unlikely to materially affect the single currency’s dynamics.

GBP/USD

The pound is losing ground against the US dollar, pulling back from the local highs of 21 October: the instrument is testing 1.3360 to the downside as investors wait for new directional catalysts. The market focus remains on the Fed’s rate decision, which triggered a brief weakening of the dollar yesterday: the rate was cut by 25 basis points to 3.75%, while the forward guidance was left unchanged. At the same time, officials upgraded their expectations for US economic growth: in 2025, GDP is now projected at 1.7% (0.1 p.p. higher than the September outlook), in 2026 at 2.3% versus 1.8% previously, and in 2027 at 2.0% (revised from 1.9%). Inflation forecasts were also adjusted: for 2025, CPI is now projected at 2.9% instead of 3.0%, for 2026 at 2.4% instead of 2.6%, and for 2027 at 2.1% (unchanged).

In January, the Fed is unlikely to cut rates again. In addition, in 2026 current Chair Jerome Powell will step down, which increases the probability that the direction of monetary policy could shift meaningfully. UK investors, meanwhile, paid attention to housing price indices from the Royal Institution of Chartered Surveyors (RICS): in November, the index improved from –17.0% to –16.0%, while analysts expected –21.0%. In addition, today at 11:50 (GMT+2) Bank of England Governor Andrew Bailey is scheduled to speak and may comment on the prospect of a rate cut at the meeting set for 18 December.

AUD/USD

The Australian dollar is declining against the US dollar, trading near 0.6632 and fully reversing the previous day’s bullish impulse that pushed the pair to new local highs from 17 September. Investors remain focused on the outcome of yesterday’s Fed meeting. As expected, the Fed cut the key rate for the third time in a row by 25 basis points to 3.75%, the lowest since November 2022. The next meeting is scheduled for 27–28 January, and policymakers are expected to attempt a pause early next year, with the option to resume easing if inflation allows.

The Fed’s forecasts for the near term have not changed: borrowing costs are still expected to fall to 3.40% in 2026 and to 3.10% in 2027. It is also worth noting that next year Jerome Powell will leave his post when his second four-year term expires. Earlier, US President Donald Trump stated that he had already chosen a candidate to nominate as the next Fed Chair but has not yet disclosed the name. Analysts believe the frontrunner is White House economic adviser Kevin Hassett, who shares Trump’s dovish stance.

Investors and forex traders are also digesting Australia’s November labour market report: seasonally adjusted employment fell by 21.3 thousand, while analysts had forecast an increase of 20.0 thousand, after a gain of 41.1 thousand in the previous month. Full-time employment dropped by 56.5 thousand, while part-time jobs rose by 35.2 thousand. The unemployment rate held at 4.3%, slightly better than the 4.4% forecast. Earlier, the Reserve Bank of Australia (RBA) left the cash rate at 3.60%, signalling a more hawkish stance after a long period of dovish communication. This decision reflects the central bank’s growing focus on inflation risks, which have become more pronounced in recent months even as the broader economy shows signs of stabilisation.

USD/JPY

The US dollar is strengthening against the yen, attempting to recover after a sharp decline the previous day: the pair is testing 155.80 to the upside, while markets continue to digest the outcome of the Fed meeting. As a reminder, the Fed cut the policy rate by 25 basis points to 3.75%. At the same time, officials upgraded their projections for economic growth: in 2025, GDP is now seen at 1.7% (0.1 p.p. above the September forecast), in 2026 at 2.3% versus 1.8%, and in 2027 at 2.0% (revised from 1.9%).

In Japan, the budget committee of the lower house of Parliament has approved an additional fiscal package of 117.5 billion US dollars through the end of March 2026, making the national budget the largest since the pandemic. The bulk of the spending is earmarked for various economic reforms proposed by Prime Minister Sanae Takaichi and for measures to offset rising prices. Around 10.6 billion dollars are expected to be allocated to strengthening national defence. Against this backdrop, inflation risks could rise, increasing pressure on the Bank of Japan to move further toward policy tightening.

XAU/USD

XAU/USD is declining, testing the 4215.00 level to the downside as analysts continue to assess the outcome of the latest Fed meeting. As expected, the central bank cut rates by 25 basis points to 3.75%, but left its projections for future adjustments in 2026 unchanged. At the same time, policymakers anticipate faster GDP growth accompanied by easing inflation pressures, which in theory could justify a more aggressive easing path in the future.

It is also important to note that in May 2026 Jerome Powell’s second four-year term as Fed Chair expires. One of the candidates mentioned by analysts as a potential successor is Kevin Hassett, currently an economic adviser to the White House and a supporter of President Donald Trump’s dovish stance on monetary policy.

Today at 15:30 (GMT+2), weekly jobless claims data will be released: initial claims for the week ending 5 December are expected to rise from 191 thousand to 220 thousand, while continuing claims could increase from 1.939 million to 1.950 million. The final November labour market report, recall, will be released next week due to disruption caused by the recent government shutdown. In parallel, markets are monitoring prospects for a possible peaceful resolution of the Russia–Ukraine conflict, which could significantly reduce geopolitical risk in Eastern Europe.