Daily Analysis 25/07/2025

• GBP/USD Price: The GBP/USD pair is trading near 1.3500, where key technical indicators—the 200- and 100-period SMAs and the 38.2% Fibonacci retracement—are converging. This alignment creates a strong technical support/resistance zone, with traders watching for a decisive breakout or rejection.
• UK Services PMI: The UK Composite PMI shows a slowdown in economic activity, with the Services PMI dropping to 51.2, below the expected 53.0. The miss highlights a weaker-than-expected service sector recovery, signaling fragile momentum despite remaining in expansion territory.
• Retail Sales: UK retail sales rose 0.9% in June, below the 1.2% expected, but still marked a positive reversal after a weak May. Gains were broad-based, with food sales benefitting from warmer weather, though overall results show a consumer sector still facing headwinds.
• Autumn Budget: The upcoming autumn budget, expected in October or November, will be crucial for UK fiscal credibility. With limited fiscal space and fragile bond market sentiment, the budget's tone and measures could significantly influence Gilt yields and GBP valuation.
• PM Starmer: Prime Minister Keir Starmer reaffirmed his support for Chancellor Reeves, dismissing speculation about a cabinet shake-up. This statement aims to reassure markets about continuity in fiscal leadership, reducing uncertainty amid sensitive economic conditions.

Closing statement: GBP/USD is testing a critical technical zone while macro data reveals mixed economic signals and political developments emphasize stability ahead of a pivotal budget. The pair may remain range-bound near 1.3500 in the short term, with upcoming fiscal announcements and global risk sentiment guiding the next move.

• XAU/USD Price: XAU/USD continues to decline for the third consecutive day, currently trading just above $3,350. The retreat is driven by a shift toward risk-on sentiment, reducing safe-haven demand as investors rotate into riskier assets.
• Jobless Claims: US Initial Jobless Claims came in at 217,000, beating forecasts of 227,000. This data adds to the narrative of a resilient US labor market, which traditionally dampens gold’s appeal as it reduces the urgency for aggressive monetary easing.
• Fed Officials: Fed Governor Waller and Vice Chair Bowman expressed support for a rate cut at the July 30 FOMC meeting. Their dovish tone has contributed to Dollar weakness, which usually supports gold, but the reaction has been muted by broader market optimism.
• Rate Cut Odds: According to the CME FedWatch Tool, markets are currently pricing in a 60% probability of a rate cut in September, while 38% expect rates to remain unchanged. These expectations are capping gold’s downside for now, though price action remains fragile.
• Trade Comments: Speaking at an AI summit, President Trump reiterated support for tariffs ranging from 15% to 50%, while calling negotiations with the EU “serious.” Although such comments introduce geopolitical uncertainty, they haven’t triggered meaningful safe-haven inflows into gold yet.

Closing statement: Gold remains under pressure from improving risk sentiment and resilient labor data, even as rate cut expectations and a weaker US Dollar offer partial support. With technical levels being tested and July’s FOMC meeting approaching, volatility may increase as gold navigates conflicting macro forces.

• Crude Oil Price: WTI is trading at around $66.20 early Friday, showing limited directional bias. The market is holding steady after a turbulent week, with headlines shifting between diplomatic developments and trade dynamics.
• Chevron’s License: The Trump administration has restored Chevron’s rights to pump oil in Venezuela, reversing an earlier revocation. This policy shift—closely tied to diplomatic bargaining—could bring additional barrels to market, potentially easing supply-side constraints.
• EU–US Trade: The EU appears ready to agree to a trade deal with the US, aiming to avert an escalating trade war. However, concerns linger as the US-Japan deal slashing tariffs on Japanese autos intensifies EU fears of market share loss, particularly in the automotive export sector.
• Economic Activity: The S&P Global Composite PMI for the US jumped to 54.6, signaling robust private sector expansion. A stronger US economy supports higher oil demand forecasts, providing a tailwind to crude prices in the near term.
• China’s AI: Despite US export bans, Chinese demand for repairing high-end Nvidia AI chips remains strong. While not directly impacting crude oil, the resilient industrial activity in China implies continued energy consumption, lending indirect support to oil demand fundamentals.

Closing statement: Crude oil prices are stabilizing amid supportive demand signals from the US and China, and potential supply additions from Venezuela. The geopolitical landscape, particularly surrounding trade and energy diplomacy, remains fluid and could trigger volatility. For now, WTI is likely to remain range-bound, awaiting firmer signals from economic and policy developments.

• DAX Price: The DAX rose 0.23% on Thursday, July 24, following a 0.83% advance on Wednesday, closing at 24,296. The uptick reflects improving investor sentiment, as trade tensions between the US and EU show signs of easing.
• US-EU Tariffs: Reports that the US may impose a 15% tariff, rather than the previously threatened 30%, on EU imports have been seen as a more favorable scenario, supporting equity markets. The August 1 deadline for trade decisions continues to anchor market focus.
• German Chancellor: Chancellor Friedrich Merz voiced cautious optimism ahead of trade-focused meetings with President Macron, stating that decisions could be imminent. His remarks added to the upbeat tone across European equities, including the DAX.
• ECB Pause: ECB President Christine Lagarde indicated that the central bank is currently more focused on evaluating trade risks and the potential economic fallout from tariffs, suggesting that rate decisions may be delayed or more data-dependent.
• Ifo Business Climate: Markets now turn attention to the Ifo Business Climate Index, due Friday. Forecasts suggest a modest improvement from 88.4 to 89, which, if confirmed, would indicate gradual recovery in German business sentiment amid an evolving external trade environment.

Closing statement: The DAX remains supported by improving trade headlines and a patient ECB, with Chancellor Merz and President Lagarde both emphasizing a data- and diplomacy-driven approach. Short-term direction hinges on upcoming Ifo data and further clarity on US-EU trade terms. Investors may remain cautiously optimistic, pending concrete outcomes.