Daily Analysis 19/12/2025

• GBP/USD Price: GBP/USD stabilizes after the previous day’s pullback from the mid-1.3400s and a nearly two-month high, though upside momentum remains limited during the European session on Friday.
• BoE Decision: The Bank of England cut its main policy rate by 25 basis points to 3.75% on Thursday, a move widely anticipated by markets following signs of easing inflation pressures in the UK.
• Policy Outlook: BoE Governor Andrew Bailey emphasized that the pace and scale of further monetary easing will depend on incoming inflation data and the broader economic outlook, keeping policy guidance data-dependent.
• Rate Expectations: Analysts suggest the BoE’s next rate cut could come in early 2026, provided economic conditions continue to allow room for additional easing.
• UK Data: UK Retail Sales fell by 0.1% MoM in November after a revised 0.9% decline in October, highlighting still-fragile consumer demand despite improving inflation dynamics.

Closing statement: GBP/USD remains supported by recent gains but lacks strong bullish catalysts. BoE easing expectations and soft UK consumption data could cap further upside unless US Dollar weakness re-emerges.

• XAU/USD Price: Gold extends Thursday’s late pullback from the vicinity of its record high and comes under additional selling pressure during the European session on Friday, reflecting some profit-taking after the recent rally.
• US Inflation: The delayed US November CPI release surprised sharply to the downside, with headline inflation easing to 2.7% y/y (vs 3.1% expected) and core CPI slowing to 2.6% y/y (vs 3.0% expected), reinforcing the narrative of cooling price pressures.
• Ukraine Loan: The European Union agreed to lend Ukraine EUR 90bn, with the funds to be raised in capital markets and backed by the EU’s shared budget. Repayment would only occur after Russia pays reparations, keeping geopolitical risks elevated and structurally supportive for gold.
• Fed Expectations: Despite softer inflation data, markets are pricing only a 26.6% probability of a Fed rate cut at the January meeting, according to the CME FedWatch tool, after the central bank delivered three consecutive quarter-point cuts.
• Data Watch: Traders will look to the University of Michigan Consumer Sentiment Index for December later on Friday for additional signals on US consumer confidence and inflation expectations.

Closing statement: Gold’s near-term pullback appears corrective rather than trend-changing. Softer inflation supports the medium-term bullish case, though limited expectations for immediate Fed easing may cap upside in the very short term.

• Crude Oil Price: West Texas Intermediate (WTI) oil prices extended losses for a second straight session, trading around $55.80 per barrel during early European hours on Friday, pressured by lingering demand concerns.
• Ukraine Talks: US President Donald Trump stated that negotiations to end the Ukraine war are “getting close to something,” ahead of a scheduled meeting with Russian officials this weekend, injecting cautious optimism into the geopolitical landscape.
• Russia Sanctions: The US is intensifying sanctions on Russia’s energy sector to bolster peace efforts in Ukraine, while the UK imposed new sanctions on three smaller Russian oil producers, maintaining pressure on Moscow’s oil revenues.
• Venezuela Risk: Reports from the New York Times highlighted Venezuela’s government ordering its navy to escort petroleum shipments, raising the risk of maritime confrontations following US threats of a “blockade” targeting the country’s oil industry.
• Demand Peak: A report from China National Petroleum Corp’s research institute projects that Chinese crude oil demand will peak by 2030, signaling a long-term shift in one of the world’s largest oil markets.

Closing statement: WTI remains under pressure amid geopolitical uncertainties and evolving demand dynamics. While peace talks could ease tensions, ongoing sanctions and regional risks continue to weigh on crude oil sentiment.

• DAX Price: DAX 40 trades near 24,170 points following a strong rebound from support just below 24,000 points, showing resilience amid mixed economic signals.
• Consumer Sentiment: The GfK and Nuremberg Institute (NIM) reported a decline in consumer sentiment to -26.9 points in January from a revised -23.4, reflecting growing pessimism among households.
• Savings Rise: The propensity to save has surged to its highest level since June 2008, as consumers remain worried about inflation and uncertain pension reforms, according to NIM’s Rolf Buerkl.
• Producer Inflation: Germany’s annual producer price inflation fell by 2.3% in November, while the monthly Producer Price Index remained steady, according to Destatis data released on Friday.
• Debt Outlook: The German Debt Office plans to issue a record EUR 512 billion in bonds and bills in 2026, including Green bonds, signaling increased borrowing to meet funding needs.

Closing statement: While the DAX shows short-term strength, persistent consumer caution and rising savings rates point to economic uncertainty. The sizeable debt issuance plan highlights government efforts to support growth amid challenging conditions.