Economic Overview - The UK economy contracted in September due to concerns over tax increases and a cyberattack on Jaguar Land Rover, increasing pressure on the Labour government ahead of the critical budget announcement on November 26 [1] - The UK's GDP fell by 0.1% month-on-month in September, against an expectation of 0%, and grew by 1.1% year-on-year, below the expected 1.3% [1] - The third quarter GDP growth was 0.1% quarter-on-quarter, below the expected 0.2%, and 1.3% year-on-year, also below the expected 1.4% [1] Sector Performance - In September, UK industrial output decreased by 2%, the largest decline since January 2021, with manufacturing output down by 1.7%, marking the biggest drop since April 2024 [1] - Seven out of thirteen manufacturing sub-sectors reported monthly declines, with the production of motor vehicles, trailers, and semi-trailers plummeting by 28.6% [1] - The electricity, gas, steam, and air conditioning supply sector also saw a decline of 3.4%, alongside a 3.4% drop in mining and quarrying [1] Business Investment - Business investment in the third quarter fell by 0.3%, better than the expected 0.7% decline, but marking the second consecutive quarter of decline, indicating ongoing weak corporate spending [1] - Year-on-year, business investment grew by only 0.7%, a significant slowdown from the previous quarter's 3% growth [1] Monetary Policy Outlook - Recent economic signals have increased the likelihood of a rate cut by the Bank of England in December, with market expectations for a rate cut now at approximately 82% [1] - Disappointing GDP data may pave the way for the Bank of England to support further easing of monetary policy, creating conditions for a potential rate cut in December [2] - The anticipated fiscal tightening in the upcoming budget could range from 0.5% to 1% of GDP, which may further encourage market expectations for a rate cut, negatively impacting the British pound [3]

Group 1 - The core viewpoint of the articles indicates that the GBP/USD exchange rate is influenced by the strengthening of the US dollar due to the potential resolution of the US government shutdown and concerns regarding the UK central bank's future interest rate decisions [1][2][4] Group 2 - The US dollar has strengthened as a result of bipartisan support for a budget agreement that would restore operations for some federal agencies and pay federal employees, alleviating market concerns about economic and financial uncertainty [1] - The Federal Reserve is expected to lower interest rates by 25 basis points in December, with a probability close to 66%, driven by rising layoff numbers in US companies, which has led to increased investor expectations for a rate cut [1] - The Bank of England has maintained its interest rate at 4.0%, with future rate cuts dependent on inflation trends, and market expectations suggest a potential rate cut before Christmas [2] - The technical analysis shows that the GBP/USD is currently around 1.3150, with short-term support at 1.3120 and resistance at 1.3200, indicating a weak short-term trend but potential for rebound based on US economic data and Bank of England signals [2]

Report Summary 1. Report Industry Investment Rating - Not provided in the report. 2. Core Viewpoints - The weak employment performance in the US supports the prices of precious metals. The high number of corporate lay - offs in the US in October has increased the probability of a Fed rate cut in December. Along with factors such as the Fed providing liquidity, geopolitical risks, and central banks' gold - buying, precious metal prices may be supported [1]. 3. Summary by Related Catalogs Precious Metal Market Data - **Gold**: - Shanghai Gold futures' closing price was 917.80 yuan/g, with a change of 5.54 yuan compared to the previous day and - 4.12 yuan compared to the previous week. The trading volume was 238,433.00, a decrease of 157,531.00 from the previous day. The inventory remained at 87,816.00 (in ten - gram units) [1]. - COMEX gold futures' closing price was 3941.70 dollars/ounce, with a change of 43.10 dollars compared to the previous day and - 5.60 dollars compared to the previous week. The trading volume was 281,102.00, a decrease of 97,457.00 from the previous week [1]. - London gold spot price was 3968.20 dollars/ounce, with a change of - 20.20 dollars compared to the previous week [1]. - **Silver**: - Shanghai Silver futures' closing price was 11427.00 yuan/ten - gram, with a change of 151.00 yuan compared to the previous day and - 14.00 yuan compared to the previous week. The trading volume was 571,201.00, a decrease of 306,143.00 from the previous week [1]. - COMEX silver futures' closing price was 47.85 dollars/ounce, with a change of - 0.02 dollars compared to the previous day and 0.57 dollars compared to the previous week. The trading volume was 74,607.00, a decrease of 24,464.00 from the previous week [1]. - London silver spot price was 47.61 dollars/ounce, with a change of 0.51 dollars compared to the previous week [1]. Important Information - The direction of the Fed's December rate cut is unclear. This year's voting members are hesitant due to the government shutdown, and next year's members are more concerned about inflation. The Bank of England kept the interest rate at 4%, and the expectation of a December rate cut is rising [1]. - The AI revolution has accelerated the lay - off wave. In October, the number of Challenger corporate lay - offs in the US increased by 175.3% year - on - year, reaching the highest level in the same period in twenty years. The private data provider Revelio Labs reported a decrease of 9100 in non - farm employment in October [1]. Investment Strategy - Temporarily stay on the sidelines. For London gold, pay attention to the support level around 3580 - 3860 and the resistance level around 4180 - 4384; for Shanghai gold, focus on the support level around 830 - 860 and the resistance level around 950 - 1000. For London silver, pay attention to the support level around 39 - 42 and the resistance level around 50 - 55; for Shanghai silver, focus on the support level around 9400 - 10000 and the resistance level around 11600 - 12400 [1].

Group 1 - Goldman Sachs now expects the Bank of England to cut interest rates by 25 basis points in November, a shift from its previous forecast in September [1] - The bank anticipates a quarterly rate cut schedule, reducing the benchmark rate from the current 4% to 3% by July 2026, earlier than the previously expected November 2026 [1] - The revision is attributed to persistent inflation and a weakening labor market, with September CPI rising 3.8% year-on-year, below market expectations [1] Group 2 - The unemployment rate in the UK rose to 4.8% in August, the highest level since May 2021, contrary to expectations of stability [1] - Private sector wage growth slowed to 4.4%, marking the lowest level since the end of 2021, despite remaining above the Bank of England's target of around 3% [1] - Bank of England Governor Bailey expressed concerns over the economy operating below potential and the ongoing weakness in the labor market [2]

Core Viewpoint - The UK government bond yields have collectively risen following the Bank of England's decision to maintain the base interest rate at 4%, amid concerns over rising public debt and budget deficits [1][3]. Group 1: Interest Rate Decisions - The Bank of England's Monetary Policy Committee voted to keep the interest rate unchanged, with seven members in favor and two advocating for a 25 basis point cut [1]. - Investment institutions have adjusted their forecasts for potential interest rate cuts by the Bank of England, with some suggesting a delay until February next year [3][4]. Group 2: Public Debt and Budget Deficits - As of the end of August, the UK's net public sector debt reached 96.4% of GDP, with a budget deficit of £18 billion (approximately $24.29 billion) in August, marking the highest borrowing for that month in five years [3]. - The cumulative deficit for the first five months of the fiscal year reached £83.8 billion (approximately $113.08 billion), exceeding previous forecasts by £11.4 billion (approximately $15.38 billion) [3]. Group 3: Market Reactions - Following the announcement of the unchanged interest rate, UK government bond yields increased, with the 1-year yield rising by 0.3 basis points to 3.925%, the 10-year yield up by 2.8 basis points to 4.713%, and the 30-year yield increasing by 5.6 basis points to 5.556% [1][2].

Group 1: Federal Reserve Insights - UBS forecasts that the Federal Reserve may lower interest rates by 75 basis points by Q1 2026, prioritizing labor market weakness over temporary inflation increases [1] - Bank of America indicates that Waller, a potential successor to Powell, seems satisfied with a 25 basis point rate cut, but internal debates on further easing remain intense due to rising inflation pressures and a deteriorating labor market [2] - ING reports that the Fed's recent decision to cut rates by 25 basis points is overall bearish for the dollar, with expectations of two more cuts this year [3] Group 2: UK Central Bank Expectations - TD Securities anticipates the Bank of England will cut rates by 25 basis points in November, maintaining a cautious stance on monetary policy [4] - Danske Bank notes that the Bank of England's recent decisions lack hawkish signals, with expectations for a rate cut in November and a gradual approach to easing [6] - Deutsche Bank highlights internal divisions within the Bank of England regarding monetary policy, predicting a rate cut in December [8] Group 3: Industry and Company Developments - CITIC Securities recommends focusing on opportunities in the photovoltaic industry, citing new energy consumption standards that could improve profitability [7] - Huatai Securities suggests that gold prices may face short-term pressure following the Fed's rate cut, but long-term investment value remains intact due to ongoing economic concerns [8] - CITIC Securities highlights Huawei's Ascend product line, which aims to accelerate breakthroughs in domestic computing power [9] - CITIC Securities expects a turning point in the performance growth of Hong Kong stocks in the second half of the year, with positive outlooks for sectors like technology and healthcare [10]

Core Viewpoint - The upcoming US inflation data is expected to be a key catalyst for the GBP/USD exchange rate, with the market currently holding a neutral view on the pound [1] Group 1: Market Sentiment - The market anticipates that the GBP/USD exchange rate will continue to fluctuate within a range, with investor focus shifting towards the upcoming UK autumn budget and its potential policy signals [1] - A potential interest rate cut by the Bank of England (BoE) in December is expected to occur earlier than the market's general consensus, which could significantly weaken the pound's interest rate advantage [1] Group 2: Technical Analysis - The GBP/USD has stabilized above the support level of 1.3400 and has broken through short-term moving average resistance [1] - The MACD indicator shows a bullish crossover, indicating increased bullish momentum; if the exchange rate effectively breaks through the 1.3570 level, it may further test resistance levels at 1.3620 and 1.3680 [1] - Initial support levels to watch for a potential pullback are at 1.3500 and subsequently at 1.3440, with an overall trend leaning towards a strong consolidation [1]

Group 1 - The UK businesses are experiencing the fastest rate of layoffs in four years, with a layoff rate of 0.5% as of August, marking the largest decline since 2021 [1] - Companies expect only a 0.2% increase in employee numbers over the next year, which is lower than previous expectations [1] - The Labour Party's measures to improve public finances are putting significant pressure on employment, as businesses face a £26 billion (approximately $35 billion) increase in payroll taxes and a substantial rise in minimum wage [1] Group 2 - Nearly half of the businesses are laying off employees to cope with rising national insurance costs, second only to profit declines [2] - The Bank of England's Governor, Andrew Bailey, indicated that the state of the labor market is crucial for future interest rate decisions, expressing concerns over weak labor demand despite high inflation levels [2] - The inflation expectations for the next year have risen to 3.3%, the highest level in 17 months, while long-term expectations for the next three years have increased to 2.9% for the first time since January [2] Group 3 - Companies plan to raise their product prices by 3.7% over the next 12 months, consistent with the findings from July's survey [5] - Expected wage growth remains steady at 3.6% for the third consecutive month, which is a key factor in price setting [5]

Core Viewpoint - Goldman Sachs research indicates that the speed and magnitude of interest rate cuts by the Bank of England may exceed market expectations due to signs of declining inflation [1] Interest Rate Outlook - The Bank of England lowered the interest rate by 25 basis points to 4% last week, surprising the market with the voting results from the Monetary Policy Committee (MPC) [1] - Goldman Sachs maintains its forecast for another rate cut in November, a pause in December, and three consecutive cuts in early 2026 [1] - The expected terminal rate is projected to be 3%, lower than the market's expectation of 3.5% [1] Inflation Forecast - Despite a rise in core inflation to 3.7% in June, Goldman Sachs expects inflation to decline over the next year [2] - Weakening labor market indicators suggest that the current economic performance is below potential levels, contributing to the inflation outlook [4] - Private sector wage growth has decreased from 5.9% in January to 4.8% in June, with expectations of further decline to 3.5% by year-end [5] - Overall inflation is expected to peak at 3.8% in September and significantly decrease in the first half of 2026 [5] Economic Growth Projections - The UK economy showed a significant slowdown in Q2, with growth rates dropping to 0.3% and household spending growth at only 0.1% [6] - Economic growth is projected to remain weak, with forecasts of 0.3% in Q3 and 0.2% in Q4 [6] - The government has a buffer of £9.9 billion (approximately $13.3 billion) for fiscal policy, but this may diminish due to the cancellation of social spending cuts and potential downward revisions of growth forecasts [6] - Large-scale tax increases are anticipated in the autumn budget to comply with fiscal rules, which may negatively impact economic growth [6] - Overall, the UK economy is expected to grow by 1.1% by 2026, with a potential further weakening of the labor market and reduced inflation pressure [6]

Core Insights - The UK labor market is experiencing a cooling trend due to increased employment taxes, uncertain trade prospects, and cautious consumer attitudes, although the decline in employment is less severe than in previous months [1][2] - The number of employees in the UK decreased by 8,000 in July, marking the sixth consecutive month of decline, but this is the smallest drop since January and better than the expected reduction of 20,000 [2] - Wage growth remains strong, with basic wages increasing by 5.0% year-on-year for the three months ending in June, although private sector wage growth has slightly decreased [1][2] Employment Trends - The unemployment rate remained stable at 4.7%, consistent with the previous period and the highest level since July 2021 [1] - The total number of employees has decreased by 165,000 since the increase in corporate taxes and minimum wage in April, indicating significant pressure on labor-intensive sectors like retail and hospitality [2] Economic Outlook - The Bank of England is expected to adopt a cautious approach in balancing inflation and economic growth, with concerns about potential price pressures from wage growth [1] - RSM UK suggests that the stabilization of the labor market reduces the likelihood of interest rate cuts by the Bank of England in the near term, with a lower probability of a rate cut in November [2]