Daily Analysis 20/06/2025

• GBP/USD Price: The GBP/USD pair trades under 1.3500 on Friday, paring earlier gains. While broad US Dollar softness—fueled by easing Middle East tensions—offers support, the pair remains constrained by weak UK economic data.
• UK Retail Sales: The UK Retail Sales fell by 2.7% MoM in May, reversing April’s revised 1.3% gain. This steep contraction, reported by the Office for National Statistics (ONS), signals waning consumer spending and could weigh on the Bank of England's growth outlook.
• Consumer Confidence: Despite soft retail data, UK GfK Consumer Confidence improved to -18 in June, better than the expected -20 and the highest level this year. The uptick suggests slightly improved household sentiment, although still firmly in negative territory.
• Trump's View: According to a CBS reporter posting on the X (nee Twitter) social media platform, President Donald Trump may be considering an order for American military assets to target an Iranian nuclear production facility.
• UK-US View: Simultaneously, UK’s David Lammy and US Senator Marco Rubio reaffirmed joint opposition to Iran acquiring nuclear capabilities.

Closing statement: GBP/USD trades cautiously below 1.3500, with mixed UK data and geopolitical headlines shaping market mood. While broad USD weakness offers near-term support, weak retail data and lingering geopolitical risks may cap further upside in the short term.

• XAU/USD Price: Gold (XAU/USD) comes under renewed selling pressure on Friday despite a mix of geopolitical and policy-related factors that would typically support safe-haven demand. The metal retreats from recent highs, suggesting cautious market behavior.
• US Intel: Senior US intelligence officials told The New York Times that Iran has not yet decided to build a nuclear weapon, despite possessing sufficient enriched uranium. This reduces immediate fears of escalation, weighing on gold prices.
• Trump's Offer: US President Donald Trump is reportedly preparing a final diplomatic proposal to Iran before deciding on potential military action. Senate Intelligence Chair noted a two-week delay in any strike decision, creating temporary market calm and easing gold demand.
• Japan Trade: Japan's Trade Negotiator Ryosei Akazawa stated that the July 9 deadline for US-Japan trade talks isn’t rigid, reflecting a more flexible stance in global trade negotiations. This moderation in rhetoric tempers broader risk aversion, further pressuring gold.
• National Security Meeting: Trump is scheduled to hold a National Security Meeting on Friday, where Iran will be a key topic. Markets are on alert for outcomes from this meeting, though the delayed strike timeline reduces urgency for defensive hedges like gold.

Closing statement: Despite ongoing geopolitical risks, gold faces headwinds from a perceived cooling in Iran tensions and moderation in trade talk rhetoric. Unless escalation resumes, gold may remain under short-term pressure, especially if risk appetite continues to rebound.

• Crude Oil Price: West Texas Intermediate (WTI) crude oil recovers early losses and rises to $73.40 during the European session. The rebound reflects continued sensitivity to geopolitical developments, especially regarding Iran-Israel tensions.
• Iran Signals: Iranian Foreign Minister Abbas Araghchi indicated a willingness to resume nuclear negotiations, conditional on Israel halting missile strikes. He is set to meet European diplomats in Geneva, raising hopes for de-escalation and potential relief on oil supply fears.
• Israel Awaits: Israeli officials expect a decision from the US administration within 24–48 hours, per The Times of Israel. The outcome will be crucial for oil markets, as any sign of military escalation could drive prices sharply higher.
• Analysts Projections: Citi projects Brent crude may stay 15–20% above pre-conflict levels (~$75–78/bbl) if 1.1 million bpd of Iranian exports are disrupted. J.P. Morgan warns of a potential $120–130 oil spike if the Strait of Hormuz is closed, while Goldman Sachs estimates a $10/bbl risk premium already priced in.
• Worst-Case Scenarios: Barclays estimates oil could hit $85 if Iranian exports are halved, and exceed $100 in the event of a regional war. Markets remain highly reactive to developments over the next 48 hours as diplomatic and military tensions unfold.

Closing statement: Crude oil remains supported by elevated geopolitical risk, though Iranian diplomatic overtures offer a glimmer of de-escalation. Traders are bracing for Trump’s imminent decision, with upside risks to oil prices sharply increasing if hostilities deepen.

• DAX Price: The DAX fell sharply to 23,057, extending losses for a second consecutive session. The index touched a six-week low of 23,052, reflecting growing risk aversion amid escalating geopolitical tensions and weak sentiment in global equities.
• Bearish Signals: The DAX has fallen below the 50-day Exponential Moving Average (EMA), a sign of short-term bearish momentum. However, it remains above the 200-day EMA, preserving a cautiously bullish long-term trend, pending further downside confirmation.
• May PPI: Germany’s Producer Price Index (PPI) declined by 0.2% month-on-month in May, slightly better than the expected -0.3%. The drop was largely due to falling energy prices, while core producer prices were flat, suggesting limited underlying inflationary pressure.
• Middle East Tensions: Fears of a Middle East escalation weighed heavily on autos, banks, and tech. Deutsche Bank (-1.31%) and Commerzbank (-1.63%) dropped on concerns about oil-driven economic shocks. SAP (-2.06%) and Infineon (-0.44%) also faced pressure amid global growth uncertainty.
• US Data: Later in the day, the Philly Fed Manufacturing Index is in focus. A modest improvement is expected (from -4 to -1), which could help risk sentiment if confirmed. However, broader trends remain dominated by geopolitical headlines.

Closing statement: The DAX is under short-term pressure, led by geopolitical risk and weaker sentiment across key sectors. While technical and fundamental signals are mixed, further downside is possible unless macro data or diplomatic developments offer relief.