Daily Analysis 12/08/2025

• GBP/USD Price: After last week’s strong rally, GBP/USD slipped on Monday, trading near 1.3430. The pullback comes as markets consolidate gains while digesting recent UK and U.S. developments.
• BoE’s Outlook: UK traders are still processing the Bank of England’s “hawkish cut”, where the central bank lowered rates but warned of a stagflationary backdrop—with sluggish growth and persistent price pressures remaining a concern.
• Split Vote: The BoE’s 5:4 vote split in favor of a rate cut was more hawkish than the expected 7:2, signaling internal caution over easing too quickly. This divergence supported Pound Sterling demand, even as markets weigh long-term growth risks.
• U.S. Policy: In the U.S., President Trump nominated Stephen Miran to replace Fed Governor Adriana Kugler, with some analysts suggesting he could also succeed Jerome Powell when his term ends in 2026—adding an extra layer of monetary policy uncertainty.
• UK Data: Investors are now focused on upcoming Q2 GDP, Industrial Production, and Trade Balance figures, which will provide fresh insights into the UK’s economic trajectory for the remainder of the year.

Closing statement: GBP/USD remains supported by the BoE’s unexpectedly hawkish stance but faces headwinds from U.S. policy speculation and slowing growth concerns. This week’s UK economic data will be crucial for near-term direction.

• XAU/USD Price: XAU/USD opened Monday on the defensive, trading near $3,345, as diminished safe-haven demand and improved risk sentiment pushed the precious metal lower. Firmer equity markets and reduced geopolitical anxiety have encouraged investors to rotate into risk assets.
• Gold Tariffs: According to a Financial Times report, the U.S. has imposed tariffs on one-kilo gold bar imports, a move confirmed by a letter from Customs and Border Protection. This development has sparked short-term uncertainty in the bullion market.
• Tariff Actions: The tariff on gold comes alongside President Trump’s reciprocal tariff hikes on multiple countries, with heavy levies on Switzerland, Brazil, and India, and threats of further measures on China and Japan over their oil imports from Russia.
• Fed Officials: Comments from Minneapolis Fed President Neel Kashkari and San Francisco Fed President Mary Daly supporting around two interest rate cuts in 2025 have added a dovish element to the U.S. monetary policy outlook, potentially limiting gold’s downside.
• Geopolitical Easing: Hopes for progress in diplomatic talks between Russia and Ukraine, combined with gains in equity markets, have curbed demand for gold as a safe-haven asset.

Closing statement: While tariffs on gold and dovish Fed commentary could offer some medium-term support, near-term sentiment remains bearish as risk appetite improves and safe-haven flows diminish.

• Crude Oil Price: West Texas Intermediate rose slightly on Tuesday’s early European session, trading at $63.39 per barrel, up from Monday’s close of $63.31. Gains remain modest as traders await fresh macroeconomic and geopolitical cues.
• U.S.-Russia Meeting: President Donald Trump announced plans to meet Vladimir Putin on August 15 in Alaska to negotiate an end to the Russia–Ukraine war. Markets are watching for any breakthrough that could ease geopolitical tensions and impact energy flows.
• Tariff Levels: The U.S. implemented reciprocal tariffs on August 7, lifting the national average tariff rate to 18.6%, its highest since 1934, affecting over 60 trading partners. The expiry of the U.S.–China 90-day tariff truce adds further uncertainty, pending Trump’s decision on an extension.
• Fed Signals: Several Federal Reserve officials noted signs of an economic slowdown, with Vice Chair Michelle Bowman advocating for a September rate cut and favoring three cuts this year. She called the July decision to hold rates steady a “missed opportunity.”
• U.S. Data: Markets await a series of high-impact U.S. reports this week, including CPI on Tuesday, PPI on Thursday, and Retail Sales alongside Michigan Consumer Sentiment on Friday. These could shape both Fed policy expectations and energy market sentiment.

Closing statement: While WTI gains remain modest, potential diplomatic progress with Russia and dovish Fed signals could provide upside support, but tariff uncertainty and upcoming U.S. economic data may cap any sustained rally.

• DAX Price: The DAX is slightly higher on Tuesday morning, trading near 24,130, up 0.25% from Monday. Gains come ahead of key U.S. inflation data, which could influence global equity sentiment.
• U.S.–China Tariff: President Donald Trump signed an executive order delaying additional tariffs on Chinese goods until November 10, allowing more time for negotiations to address trade imbalances. This pause helps reduce immediate trade-related uncertainty.
• China Restrictions: Reports indicate that Chinese authorities have instructed companies to avoid using Nvidia's H20 processors for government-related purposes. The move may have implications for the global semiconductor supply chain and related tech stocks.
• JPMorgan Outlook: JPMorgan cautions that the U.S. could face a “somewhat stagflationary” environment in the second half of the year, as tariff-driven price pressures combine with softening demand and a weakening labor market.
• German ZEW Index: In Germany, attention turns to the August ZEW index, with recent months showing a clear rebound in both current conditions and expectations. Markets will watch closely to see if optimism holds following the recent U.S.–EU trade agreement.

Closing statement: The DAX is buoyed by tariff relief and cautious optimism in Germany, but potential stagflation risks and U.S. economic uncertainty could limit gains in the near term.