Daily Analysis 17/06/2025

• GBP/USD Price: The GBP/USD pair is trading sideways, lacking clear intraday direction as it oscillates just above the 1.3550 level during Tuesday’s European session. Market participants appear cautious ahead of high-impact UK and US events.
• US-China Tensions: The Wall Street Journal reports that the US considered new tech restrictions on China if London trade negotiations falter, hinting at geopolitical spillovers that could influence broader risk sentiment and the US Dollar.
• UK-US Deal: The US plans to allow up to 100,000 UK vehicle imports annually at a 10% tariff, marking a potential step forward in UK-US trade relations. While modest, such agreements can support GBP sentiment if finalized.
• UK Inflation: Markets are bracing for UK CPI data on Wednesday, followed by the Bank of England’s policy decision on Thursday. These events are expected to significantly shape GBP direction, especially with inflation data likely to influence BoE’s tone on rate cuts.
• Geopolitical Uncertainty: President Trump’s early departure from the G7 Summit, reportedly due to "important matters" possibly linked to the Israel-Iran conflict, adds a layer of geopolitical risk that could trigger safe-haven flows and weigh on GBP/USD sentiment.

Closing statement: The GBP/USD remains range-bound, awaiting UK inflation data and the BoE meeting for a directional catalyst. Broader market risks—including US-China tensions and Middle East uncertainty—add volatility potential in the near term.

• XAU/USD Price: Gold (XAU/USD) attracted modest dip-buying in Asian trading, though momentum stalled as the metal struggled to build on early gains. Prices remain sensitive to geopolitical risks and shifting Fed expectations ahead of this week’s key events.
• Ceasefire Urges: According to Reuters, Iran has reached out to regional powers like Oman, Qatar, and Saudi Arabia to press US President Trump to intervene with Israel for an immediate ceasefire. This intensifies Middle East tensions, often a bullish factor for gold.
• G7 Statement: G7 leaders affirmed that Iran must never obtain nuclear weapons, while signaling that a resolution of hostilities could follow de-escalation. This statement reinforces geopolitical risk without offering near-term relief, adding underlying support to gold.
• US–Japan Trade: Reports indicate that the US and Japan failed to reach a trade agreement during G7 Summit side talks. Renewed trade uncertainty pressures the USD, which in turn supports safe-haven assets like gold.
• USD Gains: Despite geopolitical support, the US Dollar edged higher on positioning ahead of the two-day FOMC meeting starting today. Dollar strength poses a short-term headwind for gold, with traders hesitant to extend long positions before the Fed’s guidance.

Closing statement: Gold remains range-bound, balancing geopolitical tensions and trade uncertainty against a firm US Dollar ahead of the FOMC decision. Near-term direction will hinge on the Fed’s tone regarding the rate path and inflation outlook.

• Crude Oil Price: West Texas Intermediate (WTI) crude is trading near $71.30 in European markets on Tuesday, continuing to climb on heightened geopolitical tension in the Middle East. The sharp price move reflects the market’s growing sensitivity to potential supply disruptions.
• Middle East Conflict: An Israeli strike on Iran's state broadcaster and reported damage to its main uranium enrichment facility have raised the stakes in the region. This military escalation feeds risk premiums into oil prices, as traders anticipate retaliatory measures or further instability.
• US Reaction: President Trump reportedly ordered the National Security Council to be ready in the Situation Room, suggesting the US may consider direct involvement in the conflict. This has intensified risk-off flows globally and boosted crude as a geopolitical hedge.
• Tanker Fire: News that three tankers caught fire near the Khor Fakkan anchorage off the UAE coast stoked fears of a potential repeat of the 2019 Gulf tanker incidents, which were widely blamed on Iran. Market concerns over shipping lane security have added to upward price pressure.
• Strait of Hormuz: A senior Iranian commander signaled Tehran may shut down the Strait of Hormuz, a chokepoint that handles around 20% of global oil trade. Goldman Sachs noted that any closure would have a profound supply shock, reinforcing oil's current bullish tone.

Closing statement: Crude oil remains strongly bid on mounting geopolitical risks, especially with potential disruption looming in the Strait of Hormuz. Market attention is firmly on developments in the Israel-Iran-US triangle, with volatility expected to persist as traders brace for further escalation.

• DAX Price: The DAX index fell 0.91% to 23,484 in early trading on Tuesday, June 17, as investors trimmed risk exposure amid escalating geopolitical concerns. Still, the index remains above its 50-day and 200-day EMAs, suggesting the broader uptrend remains intact.
• Index Stocks: Mercedes-Benz, BMW, Porsche, and Volkswagen all saw losses, weighing heavily on the DAX. In tech, SAP and Infineon declined 0.93% and 1.22%, respectively, reflecting sector sensitivity to global uncertainty and potential supply disruptions.
• US Carriers: According to NBC, the US is accelerating the deployment of the USS Nimitz carrier group to the Middle East, skipping planned stops to reinforce presence alongside the USS Carl Vinson. Rising military readiness adds to global risk aversion, impacting equity sentiment.
• ZEW Sentiment: Markets are awaiting the June ZEW Economic Sentiment Index, with forecasts suggesting a jump to 35.0 from 25.2 in May. A better-than-expected reading could counterbalance geopolitical risks, offering a near-term cushion to German equities.
• US Retail Sales: Later today, US retail sales for May will be released, expected to decline by 0.7% month-on-month. Weak data could reinforce expectations of Fed easing, indirectly supporting European stocks through global liquidity tailwinds.

Closing statement: While the DAX is under short-term pressure from geopolitical and sector-specific drag, it retains technical support. Market focus will now shift to ZEW sentiment and US retail data, both of which could influence risk appetite and rate outlooks across regions.