Pound (GBPUSD=X)

Sterling pushed higher against the dollar in early European trading, rising 0.3% to $1.2959, as the governor of the Bank of England appeared to signal a more cautious approach to cutting interest rates.

Speaking in Washington DC, Bailey remarked that “disinflation is happening faster than we expected, but there are still genuine question marks about whether there have been structural changes in the economy.” His comments suggest the central bank may remain cautious about the pace of monetary easing.

Bailey also pointed out that services inflation, at 4.9% year-on-year in September, remains above the Bank’s target, while the labour market is "probably loosening but still tight." These factors indicate that policymakers may hesitate to move too aggressively on rate cuts.

In response, the odds of a November rate cut have slightly dipped, to 86% according to the latest City pricing, down from 89%.

Read more: FTSE 100 LIVE: European markets rise as BoE's Bailey says UK inflation cooling faster than expected

"Bailey’s remarks on disinflation happening faster than anticipated hint that the Bank may lower rates next month," said George Vessey, FX analyst at Convera. "However, despite improvements in inflation and slowing wage growth, traders are more cautious in betting on rate cuts in both November and December."

Against the euro (GBPEUR=X), sterling was also higher, up 0.3% to €1.2018.

Gold (GC=F)

Gold prices inched higher on Thursday as safe-haven demand outweighed the pressure of a stronger dollar, with analysts predicting record highs for the precious metal.

Spot gold rose 0.7% to $2,735.36 per ounce, while US gold futures increased by the same margin to $2,748.80. Concerns over ongoing conflicts in the Middle East, combined with uncertainty surrounding the US presidential election on 5 November, have bolstered gold’s appeal as a safe-haven asset.

“For the remainder of 2024, we see potential for gold to hit highs of $2,800, with 2025 targets around $3,000 or more, driven by persistent geopolitical risks, the US monetary easing cycle, and central bank purchases,” Sugandha Sachdeva, founder of SS WealthStreet, told Reuters.

Read more: Barclays shares soar to 9-year high as bank posts 23% profit rise

The precious metal has surged more than 30% this year, fuelled by expectations that the Federal Reserve will continue to cut interest rates.

Suki Cooper, an analyst at Standard Chartered, also sees further upside risk for gold in the coming weeks. The bank expects prices to average $2,800 per ounce in the fourth quarter of 2024, with an average of $2,900 forecast for the first quarter of 2025.