Daily Analysis 15/05/2025

• GBP/USD Price: The GBP/USD pair regains ground to trade near 1.3280 during Thursday’s European session, as markets respond positively to a stronger-than-expected UK GDP print for Q1 2025, reversing some of the pair’s recent downside.
• UK Q1 2025 GDP: UK economic output rose 0.7% QoQ, beating the 0.6% forecast and up sharply from the previous quarter’s 0.1% growth. Annual GDP grew 1.3%, providing evidence of a solid expansion.
• Other UK Data: March Industrial and Manufacturing Production both declined, suggesting that growth is not evenly distributed across sectors.
• Fed’s Goolsbee: Chicago Fed President Austan Goolsbee stressed the importance of filtering through volatile data, particularly inflation, and urged patience. His remarks suggest the Fed is likely to keep rates steady in the near term, barring any major surprises in upcoming data.
• Key US Data: Traders now await the US Retail Sales and PPI prints, which could sway USD sentiment and determine whether GBP/USD can extend its recovery or retreat back into its recent range.

Closing statement: GBP/USD is staging a recovery supported by strong headline GDP growth, but soft sectoral data and cautious Fed signals may limit upside. US economic releases later today are expected to inject volatility and provide short-term direction.

• XAU/USD Price: Gold continues its bearish streak, with XAU/USD falling for the second consecutive session on Thursday, marking its third decline in the past four trading days. The metal drops well below the $3,150 mark, hitting a fresh one-month low during European hours as investor appetite wanes.
• US-China Trade Dialogue: There are reports that US and Chinese trade officials will hold bilateral engagements on the sidelines of the APEC summit, fostering hopes for improved trade relations. The risk-on sentiment has weighed on safe-haven assets like gold, contributing to the metal’s recent downtrend.
• Fed Cuts: Traders are now pricing in just over 50 basis points of rate cuts for 2025, significantly lower than the 100+ bps priced a month ago. Reduced Fed easing expectations are limiting gold's upside, as higher-for-longer rates typically raise the opportunity cost of holding non-yielding assets like gold.
• Fed's Jefferson: Fed Vice Chair Philip Jefferson warned that new tariffs and policy uncertainty could stall inflation progress, though he noted that recent data reflect gradual disinflation. The Fed’s tone remains cautiously optimistic, supporting a wait-and-see policy stance that undermines gold’s appeal.
• Powell's Speech: Markets are awaiting Fed Chair Jerome Powell’s Thursday remarks on the central bank’s monetary framework review. His comments will be scrutinized for signals on future rate adjustments and inflation handling, which could set the near-term tone for gold.

Closing statement: XAU/USD remains under pressure amid hawkish Fed sentiment, easing trade tensions, and receding rate cut bets. Unless Fed Chair Powell delivers a dovish surprise, further downside for gold remains plausible in the short term.

• Crude Oil Price: West Texas Intermediate (WTI) crude oil trades near $61.50 during Thursday's European session, extending losses following a larger-than-expected US inventory build, which reignites fears of oversupply in a market already weighed down by soft demand signals.
• EIA Report: According to the US Energy Information Administration, crude inventories rose by 3.454 million barrels for the week ending May 9, sharply contrasting with market expectations for a drawdown. The data has triggered concerns about short-term demand and put downward pressure on prices.
• Middle East News: The Israeli military intercepted a missile from Yemen, while airstrikes on Gaza claimed over 80 lives, highlighting ongoing regional instability. Despite the violence, crude markets have shown limited reaction, suggesting geopolitical tensions are currently subdued by supply-side concerns.
• Ukraine Peace Talks: Ukrainian President Zelenskyy confirmed his attendance at peace talks in Istanbul, but President Putin’s absence has tempered market optimism for any immediate breakthrough. While relevant for broader risk sentiment, this development has had a neutral to modestly bearish impact on oil.
• Fed's Daly: San Francisco Fed President Mary Daly noted the US economy remains solid, with inflation gradually receding. She supports a wait-and-see approach on monetary policy, which offers little near-term support for commodities like oil, as the prospect of delayed rate cuts continues to cap demand-side enthusiasm.

Closing statement: Crude oil prices are under pressure as rising US inventories outweigh geopolitical risks and the Fed signals patience on rate adjustments. WTI may struggle to regain momentum unless there is a significant draw in next week’s stockpile data or a new geopolitical shock.

• DAX Price: The DAX entered consolidation territory on Thursday following its record high earlier in the week, with price action flattening amid overbought technical conditions. Analysts view the current pause as a healthy breather rather than a shift in market sentiment.
• Wholesale Prices: Germany’s April wholesale price index dipped by 0.1% month-over-month, slightly better than the -0.2% seen previously, according to Destatis. Although the decline is marginal, it suggests price pressures remain sticky, feeding into the broader inflation narrative in Europe.
• Earnings Season: Earnings reports drove major intraday moves on Wednesday. Notably, Brenntag slumped 2.9% after narrowing its 2025 profit forecast due to economic headwinds. The reaction underscores the market’s sensitivity to forward guidance amid ongoing global uncertainty.
• Merck's Annual Outlook: Merck KGaA reported Q1 earnings growth but simultaneously lowered its full-year targets, citing tariff-related uncertainty and an unpredictable macroeconomic backdrop. The move reflects a growing corporate hesitancy to fully commit to bullish forward projections.
• Upcoming Data: In the European session, there won't be that much as we just get the Eurozone Q1 GDP (2nd estimate) and the Eurozone Employment Change data. Both of them are old news and rarely market moving releases.

Closing statement: The DAX appears poised for short-term consolidation as earnings disappointments and external uncertainties cool recent bullish momentum. While the broader trend remains intact, investors may seek clarity on inflation and trade risks before pushing the index toward new highs.