Daily Analysis 11/07/2025

• GBP/USD Price: The GBP/USD pair drops for a sixth consecutive day, trading near 1.3550 in early European trading on Friday. The persistent weakness is driven by disappointing UK economic data and ongoing US Dollar strength.
• UK GDP: According to the ONS, UK GDP fell 0.1% in May, following a 0.3% decline in April, confirming continued economic contraction. Industrial and manufacturing production data also disappointed, both showing unexpected declines.
• UK Industrial Data: UK industrial and manufacturing production declined by -0.9% and -1% respectively in May, both missing forecasts. This reinforces worries about a fragile UK economic outlook and adds to downward pressure on the Pound.
• US Deals: The US has finalized trade agreements with the UK and Vietnam, and a partial deal with China, while announcing new reciprocal tariffs on 21 nations, including Japan and South Korea. These moves reinforce confidence in US trade policy and support the Dollar.
• Fed’s Goolsbee: Chicago Fed President Austan Goolsbee rejected the notion of cutting rates to ease government debt burdens, emphasizing that the Fed's mandate remains focused on employment and price stability. His comments reduce expectations for near-term rate cuts.

Closing statement: GBP/USD remains under heavy selling pressure as weak domestic data highlights economic vulnerabilities, while strong US trade positioning and firm Fed messaging bolster the Dollar. The pair risks further losses if UK fundamentals do not improve.

• XAU/USD Price: Gold prices continue their rebound from a 1.5-week low, trading around $3,343 on Thursday. The yellow metal finds support as risk sentiment remains fragile and traders re-position ahead of key US data.
• Chinese Ministry: China reaffirms that it opposes politicizing economic and trade issues. This is in response to Trump pursuing to impose 50% tariffs on copper.
• Malaysia Summit: Malaysia invited Trump to October ASEAN and East Asia summits. Trump had previously said that he will punish countries aligning with BRICS with additional 10% tariffs. However, it's not clear which countries those will be.
• Fed Signals: Only two Fed officials, Waller and Bowman, openly support immediate cuts, with most committee members preferring to wait for more definitive signs of economic weakness. This reduces expectations for near-term policy easing, slightly capping gold upside.
• Key Inflation Data: Markets await next week’s US CPI report, which could provide fresh direction. A softer inflation print may boost gold by fueling Fed rate-cut hopes, while a strong report risks triggering a deeper correction.

Closing statement: Gold remains underpinned by cautious Fed signals and geopolitical jitters but faces headwinds from a firm Dollar and upcoming US inflation data. A soft CPI could drive further upside, while a strong print may test support levels.

• Crude Oil Price: West Texas Intermediate (WTI) crude oil is trading around $65.80 in early Asian hours on Friday. Prices remain under pressure following a sharp build in US inventories.
• US Crude Stockpiles: The latest EIA report showed US crude oil inventories surged by 7.07 million barrels for the week ending July 4, a much larger rise than the prior week’s 3.835 million barrel increase. This signals weaker-than-expected demand or higher domestic production.
• Demand Forecasts: OPEC cut its global oil demand outlook for coming years despite insisting demand has not yet peaked. The group now sees global demand at 106.3 million bpd by 2026, down from last year's forecast of 108 million bpd, raising long-term oversupply concerns.
• OPEC+ Pause: OPEC+ delegates are discussing a potential pause in production hikes from October. While theoretically bullish for prices, this decision was widely expected and thus did not provide strong immediate support.
• Geopolitical Risks: Reuters reported deadly Houthi attacks on a vessel, leaving four crew members dead and eleven missing (six suspected kidnapped). Such incidents highlight risks to global oil supply routes, although the immediate price impact was muted.

Closing statement: Crude oil prices face headwinds from large US inventory builds and softer future demand projections, despite potential OPEC+ action and geopolitical tensions. Further weakness is possible if demand concerns deepen or stock builds persist.

• DAX Price: The DAX index has surged past its previous all-time high, reaching 24,650, as bullish momentum continues. Buyers are eyeing a further push toward the 25,000 mark.
• Trade Deal: EU Trade Chief Maros Sefcovic indicated that a trade agreement with the US could be finalized in the coming days, fueling optimism. However, no concrete details were provided, leaving some uncertainty.
• German Inflation: Germany’s annual inflation rate slowed from 2.1% in May to 2.0% in June, potentially supporting a dovish stance from the ECB. Nonetheless, ongoing trade negotiations remain the primary driver of market sentiment.
• Index Stocks: BMW led the gains, rallying 4.15% after signaling a strong Q3 outlook, sparking a broader auto sector rally. Porsche (+2%), Mercedes-Benz (+1.63%), and Volkswagen (+1.49%) also advanced. Conversely, bank stocks struggled, with Commerzbank and Deutsche Bank dropping 3.96% and 0.41%, respectively.
• US Recession: Expectations for a US recession have fallen sharply from 66% in May to 20% as of July 11. This shift, along with hopes for further Fed policy easing, has bolstered global risk sentiment and equities.

Closing statement: The DAX benefits from strong sector performances and optimism on US-EU trade talks, while softer inflation data may aid ECB flexibility. The index’s record-breaking run could continue if trade progress and global growth sentiment remain supportive.