Daily Analysis 15/12/2025

• GBP/USD Price: GBP/USD remains under mild pressure in the European session but continues to hold above the key 200-day Simple Moving Average. The lack of follow-through selling suggests limited downside momentum for now.
• UK GDP: UK GDP unexpectedly contracted by 0.1% in October, defying forecasts for a modest expansion. The back-to-back monthly declines reinforce concerns about a stagnating UK economy.
• Rate Expectations: Markets are widely anticipating a 25bp rate cut from the Bank of England to 3.75% at the December 18 policy meeting. These expectations continue to cap upside potential for Sterling.
• Fiscal Drag: JP Morgan’s Scott Gardner noted that uncertainty surrounding the Chancellor’s budget had a dampening effect on business and consumer sentiment. Budget-related hesitation has likely delayed investment and spending decisions.
• Data Focus: Attention turns to UK employment figures on Tuesday, followed by the delayed US Nonfarm Payrolls report. Both releases will be crucial for near-term GBP/USD direction.

Closing statement: Sterling remains supported by long-term technical levels but faces macro headwinds from weak growth and looming BoE easing, leaving GBP/USD vulnerable to data-driven volatility.

• XAU/USD Price: Gold extends its rally for a fifth consecutive session, climbing toward the $4,330 region during European trading. The sustained advance reflects strong underlying demand and a supportive macro backdrop.
• Fed Caution: Chicago Fed President Austan Goolsbee signaled discomfort with the latest rate cut, arguing that policymakers should have waited for more data following the shutdown-delayed reports. His comments reinforce a more cautious tone within the Fed.
• Rate Probabilties: Markets now assign roughly a 76% probability that the Federal Reserve will keep rates unchanged in January 2026, up from 70% before the December decision. This shift supports gold by limiting expectations of aggressive policy easing.
• Leadership Speculation: Kevin Hassett, President Trump’s chief economic adviser, is increasingly viewed as the leading candidate to succeed the current Fed Chair. His perceived dovish leanings could keep long-term policy expectations supportive for gold.
• Market News: OpenAI’s $1bn partnership with Disney highlights continued enthusiasm around AI-driven growth, sustaining risk appetite but also reinforcing diversification demand into hard assets like gold.

Closing statement: Gold remains underpinned by cautious Fed signaling and evolving policy leadership expectations, with dips likely to attract buyers as long as rate-cut uncertainty persists.

• Crude Oil Price: WTI attracts fresh buying during the European session, snapping a two-day losing streak and stabilizing around the $57.5 area. The move suggests short-term dip-buying rather than a clear trend reversal.
• Ukraine Signals: Ukrainian President Volodymyr Zelenskiy held extended talks with US envoys and signaled willingness to drop NATO aspirations. While potentially de-escalatory, markets remain cautious about the durability of any diplomatic progress.
• Venezuela Tensions: US–Venezuela frictions intensified after President Trump confirmed the seizure of a Venezuelan oil tanker by the US Coast Guard. The development raises risks around Venezuelan crude exports and regional supply flows.
• Supply Disruptions: A fire alert at Imperial Oil’s Ontario refinery and Ukrainian strikes on Russia’s Afipsky refinery highlight ongoing infrastructure risks. These disruptions add localized supply concerns to an already fragile energy backdrop.
• Revenue Pressure: Russia’s oil and gas revenues are expected to drop nearly 50% year-on-year in December, driven by lower crude prices and a stronger rouble. The sharp decline underscores mounting fiscal stress despite continued export volumes.

Closing statement: Crude oil is finding short-term support from geopolitical risks and supply disruptions, but broader price action remains capped by weak demand dynamics and pressure on producer revenues.

• DAX Price: The DAX starts Monday just above 24,300 points, extending gains from Friday’s close near 24,200. The index remains supported by positive momentum, though upside appears increasingly data-dependent.
• Inflation Update: Germany’s final November inflation data confirmed flash estimates, with CPI steady at 2.3% y/y. While electricity prices fell 1.5% y/y and food inflation stayed subdued at 1.2% y/y, the upside surprise in HICP was validated at 2.6% y/y.
• Ukraine Funding: European leaders face a key test this week at the Brussels summit, where funding options for Ukraine will be debated. Discussions include the possible use of frozen Russian assets to support a €210bn loan package, adding a geopolitical risk layer for European markets.
• Fed Signals: Cleveland Fed President Beth Hammack emphasized the need to keep interest rates sufficiently restrictive to maintain downward pressure on inflation. The comments reinforce the Fed’s cautious stance and could limit risk appetite globally.
• Data Focus: Attention in the euro area turns to flash PMIs on Tuesday, the final November inflation print on Wednesday, and the ECB’s updated growth forecasts on Thursday. These releases will be critical for short-term direction in European equities.

Closing statement: The DAX remains supported by firm price action and stable inflation data, but upcoming macro releases and geopolitical developments are likely to dictate whether gains can be sustained above the 24,300 level.