Daily Analysis 21/11/2025

• GBP/USD Price: The pair holds its early-European bounce following four straight days of retracement, supported by a modest pullback in the US Dollar. Momentum remains fragile, but stabilization shows buyers are still active at lower levels.
• Retail Sales: October sales fell 1.1% MoM, reversing September’s upward revision to 0.7%. The drop signals weakening consumer demand and increases pressure on the broader UK growth outlook.
• Autumn Budget: Political and fiscal ambiguity ahead of the November 26 Budget may limit upside for the Pound. Markets expect the BoE to delay any decisive moves until the budget’s economic implications become clearer.
• Data Ahead: Traders await the flash UK S&P Global PMI and additional Retail Sales context, alongside the US S&P Global PMI later today. These releases will shape short-term volatility and directional bias.
• Consumer Sentiment: Updates to the University of Michigan Consumer Expectations and Sentiment Indexes at 15:00 GMT could sway USD dynamics. With sentiment expected to remain weak, any deviation may cause a quick directional shift in GBP/USD.

Closing statement: GBP/USD is attempting a modest recovery, but weak UK data and fiscal uncertainty limit confidence. Short-term direction now hinges on PMI releases and US sentiment figures. A clearer trend will likely emerge after the November 26 Budget and BoE guidance.

• XAU/USD Price: XAU/USD continues to slide through the European session, marking a fresh daily low as sellers remain firmly in control. The move reflects a combination of renewed USD strength and easing safe-haven demand.
• NFP data: September Nonfarm Payrolls came in at 119,000, far exceeding market forecasts of 50,000 and reversing August’s downward-revised drop. Stronger labor data reduces the urgency for aggressive Fed easing, a bearish factor for gold.
• Other Data: Annual Average Hourly Earnings held at 3.8% YoY, slightly above expectations. This wage stickiness offsets the rise in unemployment (4.3% → 4.4%) and supports a view that inflation risks are not fully neutralized.
• December Cut: FedWatch probabilities for a December cut have fallen to around 35%, reflecting the labor data’s impact. Higher-for-longer rate expectations continue to raise the opportunity cost of holding non-yielding assets like gold.
• Geopolitical Developments: Ukraine’s President Zelenskyy signaled willingness to negotiate under the US-backed 28-point peace plan, implying potential de-escalation. Reduced geopolitical risk weakens safe-haven flows into gold.

Closing statement: Gold remains under consistent pressure as strong US labor data and reduced expectations for Fed easing outweigh geopolitical uncertainty. XAU/USD is likely to stay vulnerable unless incoming data revives rate-cut expectations or risk sentiment deteriorates sharply.

• Crude Oil Price: West Texas Intermediate extends its decline early Friday in Europe, retreating from Thursday’s close at $58.66. The bearish momentum reflects shifting geopolitical expectations and a softer risk tone.
• Ukraine–Russia: Signs of de-escalation have raised expectations that sanctions on Russian oil could be relaxed. Markets are pricing the possibility of increased global supply, putting additional downside pressure on crude prices.
• US Sanctions: Despite improving geopolitical sentiment, fresh US sanctions on Rosneft and Lukoil take effect Friday. Up to 48 million barrels may be stranded at sea, disrupting established trade routes and forcing buyers, especially in India, to seek alternative sources.
• Indian Signals: Reliance Industries halted Russian crude imports at its massive Jamnagar complex from November 20, complying with US measures. The shift affects nearly 500,000 bpd, highlighting tightening constraints on Russian flows and potential volatility in Asian demand.
• Offshore Drilling: Washington’s plan to permit drilling off California and Florida for the first time in decades has sparked political backlash. While timing effects vary, the policy direction points toward a structurally more flexible US supply outlook.

Closing statement: Crude oil remains under pressure as geopolitical easing and shifting trade flows outweigh the near-term supply uncertainty created by new US sanctions. WTI may stay soft unless demand data improves or geopolitical risks escalate anew.

• DAX Price: The index trades sharply lower in early Friday action, putting its weekly decline near 4%. Persistent selling pressure reflects fading risk appetite and renewed concerns over Germany’s cyclical outlook.
• PMI expectations: Flash PMI projections point to a slight dip in the German Composite PMI to 53.7, with Services easing and Manufacturing ticking marginally higher. The mixed signals highlight an economy still expanding, but at a slower and uneven pace.
• Bundesbank Outlook: The central bank expects Germany to post moderate expansion in the final quarter as services remain the growth anchor. Stabilization in the industrial sector offers some relief, though momentum remains weak.
• Industrial Malaise: Recent data show industrial production falling to a 20-year low, reinforcing the narrative of deep-rooted challenges in manufacturing. These persistent weaknesses continue to suppress investor confidence and weigh on equity valuations.
• China Trading: With total bilateral trade reaching nearly €186 billion year-to-date, China once again surpasses the U.S. as Germany’s largest trading partner. Market participants interpret the shift as both a geopolitical consequence of recent U.S. tariffs and a reminder of Germany’s heavy reliance on Chinese demand.

Closing statement: The DAX enters the weekend under pressure as weaker sentiment, structural industrial issues, and cautious macro signals dominate. Short-term direction will depend on PMI results and global risk appetite, with downside risks still prevailing.