Daily Analysis 29/05/2026

• GBP/USD Price: GBP/USD remained relatively stable during Friday’s European session, trading around the 1.3450 area after posting modest gains in the previous trading day.
• US-Iran negotiations: US Vice-President JD Vance stated that the United States and Iran still need to resolve several major sticking points before a broader agreement can be finalized. The comments suggest that uncertainty surrounding the Middle East conflict remains elevated.
• Market expectations: According to analysis from Pantheon Macroeconomics, traders are now pricing in one fewer Bank of England rate hike for 2026 compared to expectations from the previous week. UK gilt yields also recorded their largest weekly decline since late 2023, driven by easing oil prices, reduced political uncertainty surrounding Prime Minister Keir Starmer, and fiscal policy reassurance from Greater Manchester mayor Andy Burnham.
• US GDP: The US economy’s first-quarter GDP growth was revised down to an annualized 1.6% from the earlier 2.0% estimate. Despite the downgrade, underlying economic activity remained relatively solid, helping maintain support for the US Dollar while reinforcing expectations that the Federal Reserve may keep interest rates elevated for longer if inflation pressures persist.
• BoE talk: Investors are closely watching upcoming remarks from Andrew Bailey, Catherine Mann, and Megan Greene. Any hawkish signals regarding inflation or future interest-rate policy could help provide support for the British Pound, particularly after recent softer UK economic data weakened expectations for aggressive tightening.

Closing statement: GBP/USD remains range-bound as investors reassess both Bank of England and Federal Reserve policy expectations amid shifting geopolitical developments. Softer UK rate-hike expectations continue to weigh on Sterling, though easing political concerns and the possibility of hawkish BoE commentary may help limit further downside in the near term.

• XAU/USD Price: XAU/USD continued to recover during Friday’s early trading session, moving toward the $4,550 level after rebounding from recent two-month lows.
• US-Iran ceasefire: US officials indicated that Washington and Tehran have reportedly reached a preliminary memorandum of understanding to extend the ceasefire for an additional 60 days while formal negotiations continue. However, Donald Trump has not yet officially approved the agreement, leaving uncertainty surrounding geopolitical tensions and energy markets still elevated.
• PCE inflation: April US core Personal Consumption Expenditures (PCE) inflation came in slightly below expectations at 0.2% month-over-month versus the 0.3% consensus forecast. The softer inflation reading triggered a modest dovish reaction across financial markets, pushing Treasury yields lower and weakening the US Dollar, both of which provided additional support for gold prices.
• Fed' Williams: Fed's John Williams stated that current monetary policy remains “well positioned,” though he warned that persistently elevated inflation could still justify higher interest rates in the future.
• FedWatch Tool: According to the CME Group FedWatch Tool, traders still assign roughly a 50% probability that the Federal Reserve could deliver a 25-basis-point interest-rate hike during 2026. These expectations continue to limit stronger upside momentum in gold, as higher rates increase the opportunity cost of holding non-interest-bearing assets.

Closing statement: Gold is attempting to stabilize after recent heavy losses as softer US inflation data and a weaker Dollar improve short-term sentiment. However, ongoing uncertainty surrounding Federal Reserve policy and unresolved geopolitical tensions in the Middle East are likely to keep volatility elevated, with investors remaining cautious about the longer-term outlook for XAU/USD.

• Crude Oil Price: WTI Crude Oil continued to weaken for the third consecutive trading session on Friday, falling toward the $87.60 region during the European session.
• Oil market: Analysts at ING Group cautioned that even if the Strait of Hormuz fully reopens, the oil market may not recover quickly. The bank noted that upstream production has fallen sharply since the outbreak of the conflict because producers were forced to shut down output amid severe storage limitations, meaning supply normalization could take considerable time.
• Oil survey: The latest Oil Investment Survey showed upward revisions to investment expectations for both 2026 and 2027, though the increases were notably smaller compared to the same period last year. The data points to an approximate 1% decline in investment activity this year and relatively flat growth next year, suggesting energy companies remain cautious despite elevated oil prices and ongoing supply concerns.
• US crude inventories: The latest inventory report from the Energy Information Administration showed that US crude stockpiles declined by 3.3 million barrels last week. While this marked the sixth straight weekly drawdown, the decline was smaller than market expectations for a 4.1 million barrel reduction, slightly easing fears of extremely tight near-term supply conditions.
• Lukoil news: The US federal government extended the deadline for negotiations between Lukoil and potential buyers of its foreign assets until June 27. The extension suggests that the forced divestment process is proving more complicated than initially expected, highlighting the broader challenges sanctions and geopolitical tensions continue to create for global energy markets.

Closing statement: WTI crude oil remains under pressure as hopes for easing geopolitical tensions and a potential reopening of the Strait of Hormuz improve market sentiment. However, structurally tight supply conditions, declining inventories, and continued disruptions to global energy production suggest that downside in oil prices could remain limited unless a durable geopolitical resolution is achieved.

• DAX 40 Price: DAX 40 traded higher around the 25,165-point level during Friday’s European session as investors positioned ahead of important eurozone inflation releases.
• Bayer target: Jefferies raised its price target on Bayer from €25 to €40 while maintaining a “Hold” rating. Analyst Michael Leuchten highlighted a theoretical sum-of-the-parts valuation of €45 per share, suggesting that the market may be undervaluing parts of Bayer’s pharmaceutical and agricultural businesses despite ongoing legal and operational challenges.
• Deutsche Telekom: Deutsche Telekom and the Verdi labor union finalized a new collective bargaining agreement extending through the end of 2028. The deal includes salary increases and continued protection against compulsory redundancies, helping reduce labor uncertainty and potentially improving long-term operational stability for the company.
• DHL partnership: DHL Group announced that its US subsidiary signed a major multi-year parcel delivery agreement with the United States Postal Service. The partnership is expected to generate business volume exceeding $10 billion and represents a significant strategic win for DHL in the highly competitive US logistics and delivery market.
• Inflation data: In the euro area, we will receive May flash inflation data from Germany, France, Italy and Spain, covering 75% of the aggregate euro area print.

Closing statement: The DAX 40 continues to benefit from positive corporate news and improving investor sentiment, particularly in logistics, telecommunications, and pharmaceuticals. However, upcoming eurozone inflation data and shifting ECB policy expectations remain the key macroeconomic drivers likely to determine the index’s near-term direction.