Daily Analysis 24/07/2025

• GBP/USD Price: The GBP/USD pair posts modest gains, trading near two-week highs around 1.3600 during Thursday's European session. A weaker US Dollar and improving risk sentiment continue to support the British Pound’s advance.
• BoE's Bailey: Bank of England Governor Andrew Bailey defended the UK’s post-2008 banking framework in testimony before Parliament. He rejected proposals to ease banking safeguards, such as ring-fencing, arguing that weakening them could reintroduce systemic risks.
• Digital Pound: The BoE announced it is pausing work on the digital Pound, citing advances in private sector innovation and a lack of immediate need for central bank-led payment infrastructure. This signals a more measured and adaptive stance from the central bank on digital finance.
• Gilt Sales: The BoE is expected to temporarily halt long-term gilt sales amid weak demand from traditional investors like pension funds. Traders have scaled back rate cut expectations, though two rate cuts are still priced in for 2025.
• Next Focus: Attention now shifts to Thursday’s key economic events, including PMI data from the UK, US, and Eurozone, along with the ECB monetary policy decision. These will likely shape near-term sentiment for GBP/USD and broader market direction.

Closing statement: GBP/USD remains supported by diminished Fed expectations, regulatory clarity, and stable BoE policy messaging. Near-term movement will depend on incoming PMI data and ECB guidance, with 1.3600 acting as a psychological resistance level.

• XAU/USD Price: Gold prices eased modestly on Wednesday, slipping below the $3,400 per ounce mark as the metal lost momentum after recent gains. The decline reflects reduced safe-haven demand amid improving global trade sentiment and steady Treasury yields.
• US-Japan Trade: President Donald Trump announced a comprehensive trade agreement with Japan, including 15% reciprocal tariffs and market access for American agricultural and automotive exports. The deal reduced market uncertainty, prompting some investors to rotate out of gold.
• Fed Chair: US Treasury Secretary Scott Bessent signaled that the White House will delay naming a successor to Fed Chair Jerome Powell until December or January. The announcement removes near-term speculation about central bank leadership, keeping Fed policy expectations anchored for now.
• US Housing Data: US Existing Home Sales fell 2.7% in June to an annualized rate of 3.93 million, missing expectations. The slump underscores continued affordability pressures and adds to concerns about economic softness, which could ultimately be gold-supportive if sustained.
• China-US Talks: China's Commerce Ministry confirmed that Vice Premier He Lifeng will meet with US officials in Stockholm from July 27–30. The talks could be pivotal in stabilizing economic ties, and any positive outcome may further weigh on gold's safe-haven appeal.

Closing statement: XAU/USD faces pressure from improved trade sentiment, policy clarity from Washington, and weaker-than-expected US housing data. While gold remains supported by macro uncertainty, a firm breakout above $3,400 would require renewed risk-off triggers or dovish Fed shifts.

• Crude Oil Price: West Texas Intermediate (WTI) trades slightly higher near $65.60 during Thursday’s European session. The price continues to consolidate within a narrow range, supported by inventory data but capped by ongoing geopolitical and macroeconomic uncertainties.
• US Crude Inventories: The latest EIA report showed a decline in US crude oil stockpiles by 3.169 million barrels for the week ending July 18, following a 3.859 million barrel drop the previous week. The data suggests firm domestic demand, lending near-term support to oil prices.
• US-China Trade: US Treasury Secretary Scott Bessent will meet Chinese officials in Stockholm next week to discuss prolonging the current trade truce. While the diplomatic effort is constructive, markets remain cautious, as any escalation could undermine global energy demand.
• EU and China: European Commission President Ursula von der Leyen emphasized the importance of "rebalancing" EU-China relations, urging both sides to address long-standing trade concerns. This stance aims to reduce uncertainty for European energy markets and supply chains.
• Border Clashes: Armed conflict between Thai and Cambodian forces erupted early Thursday over a contested border area. While not directly affecting oil supply, such regional instability can fuel broader geopolitical risk sentiment, which often finds its way into oil pricing.

Closing statement: WTI remains underpinned by falling US inventories and hopes of a continued US-China trade détente. However, geopolitical tensions and ongoing uncertainty in global diplomacy may keep gains limited. Focus now turns to developments from US-China talks and broader risk sentiment for directional cues.

• DAX Price: The DAX surged on Wednesday, July 23, closing above 24,500, reversing earlier losses and nearing its all-time highs (ATHs). The rally was driven by optimism surrounding EU–US trade negotiations and improved demand data from China.
• EU–US Tariffs: EU diplomats signaled that a 15% tariff on EU exports to the US may be agreed upon, avoiding a more punitive 30% levy planned for August 1. German Chancellor Friedrich Merz noted “progress” in the talks, calming investor nerves over a potential trade escalation.
• Chinese Exports: Chinese exports to the EU jumped 6.9% YoY in June, accelerating from 3% in May, despite tariffs on Chinese EVs. Germany saw a robust 11.9% rise in imports, while France followed with an 8.6% increase, signaling sustained European demand and supporting DAX-listed exporters.
• Consumer Confidence: Germany's August GfK Consumer Sentiment Index fell to -21.5, missing the forecast of -19.2. The data reflects rising household pessimism and a shift toward precautionary saving, which may weigh on domestic consumption and retail-linked stocks.
• EU-China Meeting: European Commission President Ursula von der Leyen arrived in Beijing for a meeting with Chinese President Xi Jinping, aimed at addressing bilateral trade tensions and the Ukraine war. Markets are watching closely for signs of improved EU-China relations.

Closing statement: The DAX remains buoyant amid signs of trade détente, strong EU–China commerce, and positive corporate exposure to global demand. However, weak consumer sentiment and the outcome of key diplomatic meetings could inject volatility in the short term.