Daily Analysis 18/08/2025

• GBP/USD Price: The pound trades weaker around 1.3550 in early European hours Monday, pressured by a firmer US Dollar.
• BoE Rate Cut: Markets expect the Bank of England to cut rates in September, which could provide some medium-term support for sterling. However, according to LSEG data, traders now price the next move after that only in February 2026.
• US Retail Sales: US Retail Sales rose 0.5% MoM in July, in line with expectations but softer than June’s 0.9% gain, keeping the case for a potential September Fed rate cut intact.
• Powell's Successor: Speculation over the replacement of Fed Chair Jerome Powell is intensifying ahead of his May 2026 mandate expiry. President Trump noted mid-week that the initial list of eleven candidates has been narrowed to just three to four names.
• UK CPI: Traders now look to UK CPI inflation data due Tuesday, with core CPI expected at 3.7% YoY for July, a release likely to set near-term direction for GBP.

Closing statement: GBP/USD trades softer as the dollar gains traction, with focus shifting to UK inflation data and policy expectations from both the Fed and BoE for fresh momentum.

• XAU/USD Price: XAU/USD turned lower after failing to break the $3,400 resistance, with its near-term technical outlook offering no clear directional bias amid mixed US inflation data.
• US Tariffs: The Trump administration expanded its 50% tariffs on steel and aluminum imports to cover 407 new product codes, effective August 18, adding a layer of trade-related uncertainty.
• Ukraine-Russia Conflict: President Trump argued Ukraine should seek a deal with Russia, calling Moscow “a very big power,” following reports that Putin demanded more territory at the recent Alaska summit, according to Reuters.
• Treasury Data: US Treasury data show customs duties surged to a record $66bn in Q2, with $28bn collected in July alone, far above the monthly average of under $7bn last year.
• PMI Data: Traders now await Thursday’s preliminary S&P Global PMI data, which could provide fresh signals on US economic momentum and influence gold’s next move.

Closing statement: Gold remains capped at $3,400, with trade tariffs, geopolitical risks, and upcoming US PMI data shaping sentiment, but near-term direction still looks indecisive.

• Crude Oil Price: West Texas Intermediate (WTI) crude fell slightly early Monday in the European session, trading around $62.00 per barrel, extending its cautious momentum.
• US Push: White House trade adviser Navarro urged India to stop funding Russia through oil purchases, stressing the need for New Delhi to act more like a US strategic partner, per an FT op-ed.
• Hurricane Erin: Hurricane Erin, with sustained winds of 125 mph, is forecast to generate life-threatening surf and rip currents along the US East Coast, potentially impacting energy logistics.
• Secondary Sanctions: President Trump decided not to impose secondary sanctions on Russia for now, despite earlier threats. He may revisit the issue in two to three weeks, with European leaders including Finland’s Stubb, NATO’s Rutte, and EU’s Von der Leyen expected in Washington.
• US–Ukraine Summit: Markets are closely watching Monday’s meeting between Trump and Ukrainian President Zelenskiy, as the US pushes for a quick peace deal to end Europe’s deadliest war in decades.

Closing statement: Oil prices firmed as geopolitical risks dominated headlines, with India’s Russian oil ties, Hurricane Erin, and US–Ukraine diplomacy all shaping near-term sentiment around crude.

• DAX Price: The DAX slipped 0.07% on Friday, August 15, closing at 24,359 and partially reversing Thursday’s 0.79% advance, as geopolitical headlines dominated investor sentiment.
• Peace Prospects: Russian President Putin signaled openness to a NATO-style security guarantee for Ukraine, raising hopes for an eventual peace deal. Such a development could lower energy costs and ease geopolitical risks in the Eurozone.
• Defense Stocks: Shares of Rheinmetall AG fell 1.22%, while MTU Aero lost 0.36%, as peace prospects weighed on expectations for future defense spending.
• Auto Stocks: Conversely, auto stocks outperformed, with BMW up 1.46%, while Mercedes-Benz, Porsche, and Volkswagen also booked gains, as investors bet on stronger consumer demand in a post-war scenario.
• Eurozone Trade: Looking forward, markets will focus on Eurozone trade figures due Monday, August 18. Economists expect the trade surplus to widen to €17.5 billion in June, which could influence US–EU trade negotiations.

Closing statement: The DAX traded mixed, balancing optimism from peace signals with pressure on defense names, while autos gained. Upcoming Eurozone trade data may provide the next catalyst for market direction.