Daily Analysis 19/09/2025

• GBP/USD Price: The GBP/USD pair drifts lower to around 1.3515 in early Friday’s European session, pressured by a resilient US Dollar rebound.
• Fiscal Concerns: Ahead of the Autumn Budget (26 Nov), former Chancellor Jeremy Hunt warned of a potential £50bn fiscal gap, raising concerns over the government’s fiscal credibility and spending flexibility.
• Retail Sales: August retail sales rose 0.5% MoM, beating expectations of +0.3%, though the upward surprise is tempered by July’s negative revision, signaling uneven consumer strength.
• Policy Outlook: Goldman Sachs revised its forecast, no longer expecting a BoE rate cut in 2025; instead, the first cut is seen in February, underscoring prolonged policy caution amid sticky inflation risks.
• Labor Data: US Continuing Jobless Claims fell by 7K to 1.920M in the week ending September 6, highlighting a still-tight labor market, supporting dollar strength.

Closing statement: GBP/USD remains pressured as UK fiscal concerns, cautious BoE policy outlook, and strong US labor signals tilt sentiment in favor of the dollar. Retail sales strength offers only a mild cushion, leaving downside risks intact near-term.

• XAU/USD Price: Gold (XAU/USD) rebounds on Friday, breaking a two-day corrective slide from its recent record high, finding renewed demand as safe-haven interest stabilizes.
• Fed Policy: The Federal Reserve cut rates for the first time since Dec 2024, signaling more easing through year-end amid a softening US labor market, which typically supports non-yielding assets like gold.
• Fed Leadership: Political uncertainty resurfaced as President Trump filed an application with the Supreme Court seeking authority to dismiss Fed Governor Lisa Cook, adding institutional risk into the market backdrop.
• Middle East: The Israeli army conducted strikes in southern Lebanon, targeting Hezbollah’s infrastructure. Rising Middle East tensions continue to fuel geopolitical safe-haven demand for gold.
• US-China Relations: A potential breakthrough in the TikTok negotiations between the US and China could ease trade tensions. While this may cap gold’s upside in the short term, the broader safe-haven bid remains intact.

Closing statement: Gold stabilizes as Fed easing, political uncertainty, and geopolitical risks lend support, while any improvement in US-China ties may temper gains. Overall, XAU/USD remains underpinned by its safe-haven appeal in a volatile macro environment.

• Crude Oil Price: West Texas Intermediate (WTI) prices fell to $62.90 per barrel on Friday, extending losses from the prior session and reflecting bearish sentiment in early European trading.
• Political Pressure: President Trump criticized Vladimir Putin and urged US allies to halt Russian oil purchases, highlighting energy sanctions as a key tool to pressure Moscow amid the ongoing war in Ukraine.
• EU Policy: European Commission President Ursula von der Leyen announced plans to accelerate the phase-out of Russian fossil imports, reinforcing Europe’s energy diversification strategy.
• Russian Supply: Russia’s Novatek rerouted 70,000 metric tons of gas condensate to Novorossiisk after a shutdown at Ust-Luga, underscoring supply vulnerabilities amid logistical and infrastructure challenges.
• Market Drivers: Traders are balancing US economic data and inventory builds against risks of further Russian supply disruptions from Ukrainian drone attacks, keeping uncertainty high in the oil market.

Closing statement: Crude oil remains under pressure, but geopolitical risks and supply uncertainties continue to provide a floor. Market sentiment hinges on US demand signals and Russia’s export stability in the weeks ahead.

• DAX Price: The DAX trades around 23,720 on Friday, showing little movement after rebounding the previous day, with investors cautious ahead of fresh data and earnings updates.
• Political Developments: Germany’s Bundestag approved the delayed 2025 budget, as expected given the government’s majority. However, prior instances of dissent during Chancellor Merz’s swearing-in highlight ongoing political fragility.
• Inflation Data: The German Producer Price Index (PPI) fell by 0.5% MoM in August, a sharper decline than the 0.1% expected. Annually, PPI dropped 2.2%, extending disinflation trends and exceeding forecasts of -1.8%.
• External Signals: In the US, the Philadelphia Fed Manufacturing Index jumped to 23.2 in September, its highest since January, suggesting robust activity and potentially influencing global risk sentiment.
• Corporate Focus: German equities face headwinds as Stroer lowered its forecast and Stabilus announced a cost-cutting program, both moves expected to pressure profit outlooks within the DAX sector mix.

Closing statement: The DAX trades cautiously as weak domestic inflation data and corporate downgrades counterbalance US economic strength. The index may remain rangebound unless macro or political catalysts shift sentiment.