Daily Analysis 19/08/2025

• GBP/USD Price: The GBP/USD slipped toward 1.3500 in Monday’s European session, as the US Dollar firmed, applying downside pressure to the pair.
• Sterling Trend: Despite a steady uptrend since early August, supported by higher swing lows and closes above the Bollinger midline, the latest pullback challenges the resilience of sterling’s bullish structure.
• Morgan Stanley: Morgan Stanley expects Powell to lean hawkish at Jackson Hole, arguing last week’s CPI data reduces the likelihood of a dovish pivot, potentially bolstering the USD.
• GS Outlook: In contrast, Goldman Sachs anticipates further USD depreciation, noting that incoming data and Fed commentary leave space for three 25bp rate cuts, which could support GBP in the medium term.
• Geopolitic News: NATO’s Washington summit delivered progress on Ukraine security guarantees, with Rutte highlighting movement toward Article 5-type arrangements. This geopolitical development could temper safe-haven flows into the USD if peace prospects strengthen.

Closing statement: The GBP/USD faces short-term downside risks from USD strength and hawkish Fed expectations, but medium-term drivers such as Fed easing bets and improving geopolitical sentiment may restore support for sterling.

• XAU/USD Price: XAU/USD eased after an initial bullish attempt, holding marginally higher around $3,335 per ounce, as traders reassessed market drivers.
• Fed Rate Cut: Markets continue to expect a Fed rate cut in September, though the probability of a 50 bps move has faded after the US CPI report, leaving rate cut expectations more moderate.
• Intel Headline: Intel shares slid up to 5% on reports of a potential 10% US government equity stake, raising broader questions over state intervention in strategic industries.
• Data-Heavy Week: Investors await a packed US calendar with FOMC minutes, jobless claims, housing data, and flash PMIs, all of which could influence gold via dollar and yield moves.
• Jackson Hole: The Kansas Fed’s Jackson Hole symposium later this week, with global central bank leaders speaking, will be closely watched for monetary policy signals impacting gold.

Closing statement: Gold remains supported near $3,335 but lacks clear momentum, with Fed policy expectations, US data releases, and Jackson Hole speeches set to shape near-term direction.

• Crude Oil Price: Crude oil prices slipped to $62.20 per barrel on Tuesday, down from Monday’s $62.56 close, reflecting modest selling pressure in early European trading.
• Technical Outlook: Indicators show a fragile technical setup: RSI at 42 is climbing from oversold but still below neutral, while the broader trend continues to print lower highs, signaling restrained upside potential.
• Hurricane Erin: Hurricane Erin, with sustained winds of 125 mph, is tracking northwest near the Bahamas, posing coastal storm risks and potential supply disruptions along parts of the US coastline.
• Geopolitical Signals: Russian President Putin’s agreement to meet Zelenskyy for peace talks boosts hopes for progress in resolving the Russia-Ukraine war, which could ease geopolitical risk premiums on oil.
• China’s Economy: Beijing pledged measures to stabilize housing, employment, and consumption, aiming to bolster growth. Stronger demand prospects from China could provide a longer-term cushion for crude.

Closing statement: WTI crude holds near $62.20 with limited bullish momentum, balancing geopolitical peace hopes and Chinese stimulus against technical weakness and hurricane-related uncertainty.

• DAX Price: The DAX is set to begin Tuesday with little movement, holding close to its record mid-July peak of 24,639 points. The index remains technically strong, consolidating near all-time highs.
• Political Support: German Chancellor Merz backed Trump’s security guarantees for Ukraine, emphasizing a joint European role in long-term stability. Reduced geopolitical risks could improve investor sentiment in Europe.
• Rising Insecurity: A survey across five European countries found Germans most concerned about financial insecurity in the coming months, signaling potential consumer spending weakness that could weigh on domestic demand.
• Auto Tariffs: Germany stressed the US must deliver on lower car tariffs before broader trade agreements are finalized. The auto sector, a DAX heavyweight, remains sensitive to transatlantic trade negotiations.
• Trade Links: Germany’s trade with Central and Eastern Europe surged by EUR 5.4bn to EUR 275bn in H1 2025, led by Poland overtaking China as a top export destination. This shift highlights stronger regional economic integration.

Closing statement: The DAX holds steady near record highs, balancing positive geopolitical signals and robust regional trade growth against consumer insecurity and unresolved US-EU tariff talks. Outlook remains cautiously constructive with trade negotiations as the key swing factor.