Daily Analysis 03/10/2025

• GBP/USD Price: GBP/USD trades with modest losses around 1.3435 on Friday, though the weaker US Dollar provides some offset as US job market momentum slows.
• UK Fiscal Concerns: Lingering fiscal uncertainty ahead of the November Autumn Budget weighs on sentiment, limiting bullish positioning on the Pound.
• BoE Policy: BoE’s Catherine Mann highlighted risks of persistent “higher-for-longer” inflation, supporting a cautious stance of keeping rates on hold.
• Inflation Expectations: The latest BoE Decision Maker Panel survey showed UK firms now expect one-year CPI inflation at 3.5%, with own-price growth rising slightly to 3.8%, underscoring sticky price pressures.
• Data Watch: Focus turns to the final UK Services PMI and a speech by BoE Governor Andrew Bailey, both of which could provide near-term directional cues for Sterling.

Closing statement: GBP/USD remains under pressure from UK fiscal risks and sticky inflation expectations, though Dollar softness limits downside. Traders await PMI data and Bailey’s remarks for fresh momentum.

• XAU/USD Price: Gold (XAU/USD) trades sideways around $3,860 in early European hours, with gains capped as overbought conditions keep bulls cautious.
• US Labor Market: The Challenger report showed 56,064 job cuts in September, drawing unusual attention amid uncertainty over the jobs outlook.
• Political Risk: A budget deadlock in Washington has led to a government shutdown, though markets expect only a limited economic impact, muting safe-haven flows.
• Fed Policy: Markets are pricing in two more Fed rate cuts in 2025, but confirmation hinges on labor data. GDP growth remains strong at 3.8%, while inflation still trends above target at apprx 3%.
• Data Void: With the Labor Department closed, neither the Nonfarm Payrolls (NFP) report nor jobless data will be released, reducing short-term catalysts for gold.

Closing statement: Gold remains in consolidation mode near record levels as investors weigh political gridlock and Fed easing expectations against strong growth and sticky inflation. The absence of labor market data could limit volatility in the near term.

• Crude Oil Price: West Texas Intermediate (WTI) trades at $60.80 per barrel in early European hours, modestly higher from Thursday, but still on track for a third straight weekly decline.
• OPEC+ Production: Markets expect OPEC+ to boost supply, reinforcing the bearish sentiment that production increases could weigh on prices further.
• Iraq Kurdistan Exports: The resumption of Kurdish oil exports after a 2.5-year halt is adding 180,000–190,000 bpd to global supply, raising surplus concerns.
• US Inventories: The EIA reported rising crude, gasoline, and distillate inventories last week, reflecting weaker refining activity and soft demand in the US.
• US Shutdown: Fears that the US government shutdown will slow economic activity in the world’s largest oil consumer add to downside risks for demand.

Closing statement: Crude oil remains under pressure, with oversupply risks from OPEC+ and Iraq’s exports weighing on sentiment while demand fears deepen amid the US shutdown. Short-term direction hinges on OPEC+’s production decision and US economic stability.

• DAX Price: The DAX trades around 24,500 points, up 0.16% on Friday, with potential to set a record high on German Unity Day.
• Corporate Calendar: Key events ahead include Aurubis’ capital markets day on Wednesday, and Gerresheimer’s quarterly report plus Volkswagen’s Q3 delivery figures later in the week.
• US–China Trade: Treasury Secretary Scott Bessent signaled optimism, forecasting a “big breakthrough” in the next trade talks. A Trump–Xi meeting during their Korea visit could be pivotal as the current truce expires Nov. 10.
• Digital Euro: The ECB selected a Portuguese AI startup to enhance fraud prevention measures for the planned digital euro.
• European Data: Investors eye Eurozone service PMI and inflation data later on Friday, which could influence short-term sentiment toward the bloc’s growth outlook.

Closing statement: The DAX edges higher toward fresh records, supported by corporate developments and cautious optimism on US–China trade. Macro data and upcoming company updates will provide the next catalysts for momentum.