EBC Markets Briefing | Sterling down after first BOE rate hike in years

The British pound dipped on Friday as a steep drop in American stocks led investors to seek safety in haven assets, pulling Treasury yields down just before the release of the key US jobs report.

Traders ramped up bets on future UK rate hikes after the BOE issued its first rate increase since 2023 and warned that another hike is likely if the Iran war persists.

Governor Andrew Bailey noted the plunge in oil prices but warned that the outlook for inflation and rates remains highly uncertain due to lingering "inflationary pressure in the pipeline."

Local service businesses grew faster last month than at any point since February, with more orders and new hires, though they also had to deal with steeper costs.

British assets have experienced a broad recovery over the past few weeks. Encouraging economic growth data has supported a rally in equities and the pound, while simultaneously easing pressure on gilts.

The UK is willing to spend up to £450m annually on tuition discounts for EU students, but only if Brussels grants the UK access to its "Made in Europe" industrial programme.

EBC Financial Group analyst says sterling has transitioned into a robust bullish trend reversal by early November. Further gains towards $1.35 are more likely than not if it stays comfortably above 200 SMA.

Asset Recap

As of market close on 5 November, among EBC major products, ProShares UltraPro Short QQQ led gains as the NASDAQ 100 fell to a 19-month low and entered a correction.

AXT stock plummeted. Initial optimism surrounding AI data centre growth evaporated within a week as the stock faced a severe sell-off, completely overshadowing its Q3 2026 earnings beat.

Oil prices rebounded slightly from a massive plunge as investors questioned whether the US midterm results would truly lead to a quick end to the conflict with Iran.

A portfolio diagnostic is critical to managing tail risk. EBC Turbo leverages a proprietary scoring model to run a six-dimensional analytics scan within 5 seconds, mapping your risk-return dynamics and decoding your trading DNA.

EBC Financial Group Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC Global Financial Collaboration or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.