Daily Analysis 16/12/2025

• GBP/USD Price: GBP/USD remains under pressure and trades in negative territory around the 1.3365 area. The pair is struggling to find support as markets digest weaker UK labor data.
• UK Labor Market: The UK ILO Unemployment Rate rose to 5.1% in the three months to October, up from 5.0% previously, according to ONS data. The uptick reinforces concerns that labor market conditions are cooling faster than anticipated.
• Employment Details: Jobless claims increased by 20.1K in November, reversing October’s revised decline of 3.9K and coming in slightly below expectations. Employment Change printed at -17K in October, marking another month of contraction and adding to downside pressure on Sterling.
• Fed Signals: New York Fed President John Williams adopted a modestly hawkish tone, noting that monetary policy has shifted from “modestly restrictive” toward neutral. His comments offered some support to the US Dollar.
• US Data: Attention now turns to the US November Nonfarm Payrolls report, which is expected to show 40K job gains with the Unemployment Rate holding steady at 4.4%. Any upside surprise could further weigh on GBP/USD.

Closing statement: Sterling remains vulnerable amid weakening domestic labor conditions, while near-term direction for GBP/USD will likely hinge on the US jobs report and broader Fed rate expectations.

• XAU/USD Price: Gold faces selling pressure during the Asian session and extends the pullback from the $4,350 region, close to the highest level since October 21. The lack of follow-through buying suggests some profit-taking at elevated levels.
• Fed Outlook: The Federal Reserve’s Summary of Economic Projections (SEP) indicates a cautious policy path, with the median forecast pointing to just one 25 bps rate cut by the end of 2026. This reinforces higher-for-longer rate expectations, limiting upside for the non-yielding metal.
• Geopolitical Developments: US officials said an agreement with Ukrainian President Volodymyr Zelenskyy to end the war with Russia is nearly complete. However, unresolved territorial disputes and the absence of firm US and European security guarantees keep geopolitical risks alive, offering underlying support to gold.
• Rate Expectations: Fed funds futures price a 75.6% probability that the Fed will keep rates unchanged at the January meeting, according to the CME FedWatch tool. Stable rate expectations reduce immediate volatility but cap bullish momentum for gold.
• US Data: Markets are awaiting the delayed US Nonfarm Payrolls data for October and November. October’s release will be incomplete due to shutdown-related data collection issues, which could limit the report’s market impact but still influence near-term dollar and gold price action.

Closing statement: Gold remains supported by geopolitical uncertainty but faces near-term headwinds from restrictive Fed expectations and upcoming US labor data, keeping price action vulnerable to further consolidation or modest pullbacks.

• Crude Oil Price: WTI crude trades near $56.30 during early European hours, holding above recent lows amid mixed market signals.
• Venezuela Sanctions: Reuters reported that Venezuela's oil shipments have fallen substantially since the US seized a tanker last week and imposed fresh sanctions on shipping companies and vessels doing business with Venezuela.
• China Data: The weak economic data out of China, the world’s largest crude importer, boosted concerns of oversupply. Weak Chinese factory output and sluggish retail sales raise fears of softening global oil demand heading into 2026.
• EU Restrictions: The European Union on Monday slapped sanctions on nine entities and individuals for supporting Russia’s shadow fleet moving oil, as the bloc seeks to further restrict Moscow’s ability to generate revenues from energy exports.
• Inventory Watch: Traders await the American Petroleum Institute’s crude stockpile report due later Tuesday for clues on US supply trends.

Closing statement: Crude oil prices face downward pressure from demand concerns and geopolitical sanctions, while key inventory data may provide short-term directional cues.

• DAX Price: The DAX trades near 24,080 after failing to sustain gains above the 24,500 resistance area. The loss of bullish momentum raises the risk of a near-term pullback toward the 23,786 support zone.
• Economic Signals: Germany’s economy appears to have started Q4 on a solid footing, according to the economy ministry. However, deteriorating business expectations and weaker consumer sentiment suggest that growth momentum could soften in the months ahead.
• Ukraine Risk: Germany warned that EU members refusing to support a Ukraine reparations loan backed by Russian sovereign assets could face higher borrowing costs and credit-rating pressure. This adds a layer of political and financial uncertainty to the European market backdrop.
• PMI Outlook: Germany’s flash Composite PMI is expected to edge lower, driven by a slowdown in services activity. Still, business output is forecast to remain above the 50 threshold, indicating continued expansion rather than contraction.
• ECB Focus: Markets are looking ahead to the ECB’s final policy meeting of the year on Thursday. While rates are expected to stay at 2%, President Lagarde’s comments about potentially lifting growth forecasts could influence equity sentiment.

Closing statement: The DAX remains structurally supported by resilient growth signals, but near-term technical exhaustion and softer forward-looking indicators point to consolidation risks. Direction will likely hinge on PMI data and ECB guidance.