Daily Analysis 21/10/2025

• GBP/USD Price: The British Pound (GBP) continues to weaken against the US Dollar (USD), marking its third straight session of decline as risk sentiment and soft UK fundamentals weigh on the currency.
• Reeves Highlights: UK Chancellor Rachel Reeves underscored the long-term damage from Brexit, noting that the UK’s productivity challenges have been worsened by the manner of its EU exit, dampening investor confidence in the medium-term outlook.
• Labor Market: Recent data showed a slowdown in wage growth and a rise in unemployment, reinforcing market expectations that the Bank of England (BoE) could deliver another rate cut before year-end to support economic activity.
• Inflation Concerns: BoE Governor Andrew Bailey recently cautioned that the UK is “not out of the woods yet” regarding inflation, suggesting policymakers remain wary of easing too aggressively even as growth momentum softens.
• Upcoming Data: Traders now turn to Wednesday’s inflation and retail reports for clearer direction on the BoE’s next policy move, with weaker readings likely to add further pressure on the Pound.

Closing statement: The GBP/USD pair remains under pressure amid soft domestic data and renewed Brexit-related concerns. Unless upcoming UK inflation surprises to the upside, the pair could extend losses toward key support levels as markets brace for potential BoE rate cuts.

• XAU/USD Price: The XAU/USD pair eases modestly during Tuesday’s European session, yet remains close to record levels as investors maintain exposure to safe-haven assets amid lingering global uncertainties.
• Trade News: Market sentiment improved after President Trump acknowledged that proposed 100% tariffs on Chinese goods were unsustainable, though he still blamed Beijing for the recent breakdown in trade negotiations linked to rare-earth controls.
• US-China Talks: Treasury Secretary Scott Bessent confirmed that US and Chinese officials will meet in Malaysia this week to set the stage for a potential Trump–Xi meeting later this month at the APEC conference in South Korea.
• Fed Easing: The CME FedWatch Tool shows traders have nearly fully priced in two 25 bps cuts, one in October and another in December, keeping US yields capped and supporting gold prices.
• US CPI: Investors are awaiting Friday’s inflation report for insights into the Fed’s policy trajectory, with any soft print likely to reinforce dovish expectations and extend gold’s bullish momentum.

Closing statement: Gold remains resilient near record highs, buoyed by dovish Fed expectations and cautious optimism surrounding US-China diplomacy. Unless US inflation surprises to the upside, the XAU/USD pair could stay firmly supported above key levels as investors hedge against macro uncertainty.

• Crude Oil Price: West Texas Intermediate (WTI) crude rises slightly in early European trading on Tuesday, hovering near $57.00 per barrel, maintaining modest upward momentum after Monday’s flat close.
• OPEC+ Supply: OPEC+ continues to pursue plans to raise oil output, fueling expectations of a market surplus through next year. The IEA forecasts a potential global oversupply of 4 million barrels per day by 2026, heightening pressure on prices.
• Peace Terms: Russian President Vladimir Putin reiterated his demand for full control of Donetsk, while hinting at possible concessions elsewhere. President Trump proposed freezing the front lines, but Ukraine’s Zelenskyy firmly rejected any territorial compromise.
• US-China: The upcoming US-China trade talks this week could influence global demand sentiment, particularly if discussions signal progress on tariff or export restrictions.
• API Inventory: Traders await the American Petroleum Institute’s (API) weekly crude stock report later today for clues on short-term supply dynamics in the US market.

Closing statement: Crude oil prices remain range-bound, caught between OPEC+ output expansion and lingering geopolitical tensions. Near-term moves will hinge on inventory trends and any positive signals from US-China trade negotiations, though a broader surplus outlook may cap upside potential.

• DAX Price: Germany’s benchmark DAX index trades 0.25% lower at 24,270 points on Tuesday, consolidating recent gains as investors digest cautious domestic data and subdued global sentiment.
• Tax Revenues: The German Finance Ministry reported that federal and state tax revenues increased 2.6% year-over-year in September, providing limited fiscal relief amid broader economic stagnation.
• Economic Outlook: The German economy contracted for a second consecutive year in 2024, with only 0.2% growth projected for 2025. According to Reuters, official data suggest no near-term acceleration in economic activity, highlighting persistent structural weakness.
• Bundesbank Warning: Bundesbank President Joachim Nagel stressed that immigration is vital to offset Germany’s aging population, warning that without new labor inflows, the country risks losing significant economic strength.
• Siemens News: JP Morgan reaffirmed its Buy rating on Siemens AG, with analyst Phil Buller maintaining a positive outlook on the company’s fundamentals and medium-term growth potential.

Closing statement: The DAX remains under mild pressure as Germany’s structural and demographic challenges weigh on investor sentiment. While corporate strength in firms like Siemens offers some support, weak macro indicators continue to limit upside momentum for the index.