Daily Analysis 28/07/2025

• GBP/USD Price: The GBP/USD pair posted slight losses during the European session on Monday, hovering around 1.3430. The price action reflects muted sentiment ahead of key political and economic developments.
• Trump–Starmer Meeting: US–UK trade relations are in focus as President Trump meets UK Prime Minister Keir Starmer, with attention on tariffs impacting major UK exports like steel, whisky, and pharmaceuticals. Markets await details on a refined trade pact that could reshape bilateral commerce.
• Tech Export Controls: The US is reportedly holding back on strict tech export controls toward China, a move seen as an attempt to smoothen trade tensions. This may pave the way for a Trump–Xi meeting later this year, signaling a broader shift toward trade diplomacy.
• US Durable Goods: June’s durable goods sales fell 9.3%, slightly better than the -10.8% estimate but still marking the worst monthly drop since early pandemic days. This adds to concerns about weak manufacturing and investment sentiment.
• Fed Policy: Markets are focused on the Fed’s upcoming policy meeting, with broad consensus that interest rates will remain steady. Forecasts now favor a potential move in September, keeping the USD outlook relatively balanced for now.

Closing statement: GBP/USD remains under slight pressure amid UK–US trade uncertainty and mixed US economic signals. The upcoming Fed decision and political developments may drive volatility, but the market appears to be in a wait-and-see mode, with no clear directional bias yet.

• XAU/USD Price: Gold prices failed to maintain momentum above the $3,400 mark, signaling a near-term hesitation among bulls. The technical outlook remains fragile despite the earlier breakout, with consolidation expected if no fresh catalysts emerge.
• Chinese Gold Demand: Gold demand in China fell 3.5% YoY in H1 2025, as reported by the China Gold Association. However, a 24% surge in investment demand for bars and coins (up to 264 tons) helped cushion the decline, reflecting investor interest amid economic concerns.
• China’s Industrial Profits: Industrial profits fell 4.3% in June, after a 9.1% plunge in May. Persistent producer price deflation and subdued domestic demand, coupled with global trade uncertainty, continue to weigh on China’s industrial sector, which can impact broader commodity sentiment.
• US–China Trade: Negotiators from the US and China are set to meet in Stockholm to discuss a possible 90-day extension before the August 12 tariff cliff. While punitive tariffs loom, markets see a delay as the most likely outcome, reducing safe-haven demand for now.
• Fed Expectations: A Reuters poll shows unanimous consensus that the Fed will leave rates unchanged in the 4.25%–4.50% range this week. This expectation has limited USD upside, offering mild support to gold but not enough to trigger sustained bullish moves.

Closing statement: Gold faces technical resistance and mixed fundamentals, with falling Chinese demand and cautious global trade sentiment weighing on upside potential. While Fed pause expectations offer some support, the lack of clear safe-haven drivers keeps XAU/USD in a range-bound posture for now.

• Crude Oil Price: West Texas Intermediate (WTI) is trading near $65.50 during European hours, with markets awaiting updates from OPEC+ discussions and digesting a mix of supply and sentiment-related headlines.
• Reuters-OPEC: According to Reuters, sources suggest the OPEC+ panel will likely keep its current output policy unchanged at Monday’s review. This reinforces expectations of short-term supply stability, limiting immediate price volatility.
• Kazakh Export: Recent export delays from Kazakhstan, triggered by Russian restrictions and contamination checks, briefly boosted crude prices. With flows now normalized, the temporary supply squeeze has eased, removing one of the short-term supports for WTI.
• Market Struggles: Oil traders are caught between strong current prices and warnings of a weaker second half, according to Bloomberg. Bank of America’s Francisco Blanch warns of a growing supply surplus, which could weigh on prices in the coming months.
• Global Agencies: Both the International Energy Agency (IEA) and the US EIA anticipate a global oil surplus next year. The IEA, in particular, sees an excess of 2 million barrels per day, contributing to a bearish long-term outlook despite short-term price resilience.

Closing statement: Crude oil prices remain steady but vulnerable, as supply disruptions fade and surplus concerns intensify. While OPEC+ stability provides near-term support, the looming global oversupply threatens to cap further gains, keeping WTI prices in a fragile equilibrium.

• DAX Price: The DAX declined 0.32% to 24,218 on Friday, reversing a modest gain from the previous session as investors positioned cautiously ahead of a potentially market-moving EU–US trade deal and the upcoming Fed rate decision.
• Index Stocks: Puma shares dropped 18.7% after it missed earnings expectations and cut its full-year guidance. However, LVMH’s optimism about a Chinese retail rebound helped offset broader sector weakness, with Adidas and Zalando posting modest gains.
• German Ifo Data: The Ifo Business Climate Index for July rose to 88.6, just below expectations (89.0) but slightly improved from June. The data suggests tentative stabilization in German business sentiment, although concerns about growth persist.
• ECB Policymakers: Comments from ECB's Simkus and Rehn indicate a steady policy approach, with inflation seen stabilizing at 2% and rate decisions continuing on a meeting-by-meeting basis. However, Rehn expressed growing concern about economic growth in the Eurozone.
• US Data: Investors are eyeing the upcoming Dallas Fed Manufacturing Index today and Wednesday's FOMC decision, which could shift sentiment across global equity markets, including the DAX. Forecasts suggest a mild improvement in US manufacturing sentiment.

Closing statement: The DAX remains under mild pressure amid earnings volatility, cautious central bank messaging, and trade deal uncertainty. With key US economic data and the Fed decision looming, the index is likely to stay in a narrow, reactive range in the near term.