The US Dollar Index (DXY) surged to a 3½-month high, rising 0.61% to 100.35, exerting downward pressure on both Silver (XAG/USD) and the British Pound (GBP/USD) [1][2]. Silver extended its losses for the third consecutive day, dropping over 2.90% to $80.16 and poised to end the week with nearly 3% losses [1]. Meanwhile, GBP/USD fell for the fourth straight day, trading near 1.3240 and reaching its lowest level since December 3, 2025 [2].
The decline in Silver was attributed to rising US Treasury yields, with the 10-year T-note up 2.5 basis points to 4.287%, and firm oil prices, which have pushed pump prices more than 20% higher to $3.60 per gallon since the onset of the Middle East conflict two weeks ago [1]. President Donald Trump announced strong action against Iran in the coming week, following a partial 30-day waiver for buying sanctioned Russian Oil [1]. Oil prices reached a yearly high near $113.00 a barrel earlier in the week, but settled at $95.90 as of writing [1].
US economic data showed mixed signals: the second estimate of US Q4 2025 GDP dipped from 1.4% YoY to 0.7% YoY, while the Federal Reserve's preferred inflation gauge, the Core PCE, remained steady at 3.1% YoY in January [1][2]. The headline PCE figure dipped from 2.9% to 2.8% YoY [1]. The JOLTS Job Openings report came in higher than expected at 6.946 million in January, up from 6.55 million in December [2]. In the UK, monthly GDP was flat at 0% MoM in January, following 0.1% in December [2].
Market participants increased their bets on Fed rate cuts in 2026, with expectations rising from 17 basis points at the start of the session to at least 19.5 basis points of easing [1]. Both the Federal Reserve and Bank of England are scheduled to make new determinations on interest rates next week, with expectations for a dovish hold by the BoE and the Fed expected to keep rates on hold while publishing a fresh Dot Plot [2]. Analysts note that $100-per-barrel oil could increase UK CPI by approximately 0.6 percentage points due to higher fuel costs [2].
Technical analysis for Silver indicates a bearish short-term outlook, with sellers targeting a break below $80 and the RSI slipping toward 45, confirming downside pressure [1]. GBP/USD also shows bearish dominance, trading below key moving averages and horizontal resistances, with the RSI near 30 and initial support at 1.3230 [2].
CONCLUSION
The strengthening US Dollar, driven by sticky inflation and geopolitical tensions, has led to significant declines in both Silver and GBP/USD. Rising yields and elevated oil prices are fueling concerns about inflation and central bank policy responses. With major rate decisions from the Fed and BoE looming, markets remain cautious and focused on upcoming economic data and geopolitical developments.