Daily Analysis 29/10/2025

• GBP/USD Price: The GBP/USD pair fell for the second straight session, hovering near 1.3220 in Wednesday’s European trading, as traders continued to sell the British Pound amid renewed USD strength and dovish expectations for the Bank of England (BoE).
• Retail Prices: Hopes for monetary easing by the BoE gained traction after data showed that UK retailers cut prices in October, suggesting that inflationary pressures are cooling and paving the way for potential rate cuts in the coming months.
• Shop Inflation: The British Retail Consortium (BRC) reported that shop inflation slowed to 1% YoY in October from 1.4% in September, aligning with last week’s weaker CPI data and reinforcing the case for a less aggressive policy stance from the BoE.
• Trade Developments: US President Donald Trump signaled that US tariffs on Chinese goods could be reduced in exchange for China’s commitment to limit fentanyl exports, which buoyed market optimism toward the USD and weighed on the Pound.
• US-China: Treasury Secretary Scott Bessent added that China may also boost US soybean imports, enhance anti-fentanyl efforts, and finalize the TikTok deal, further supporting risk sentiment and strengthening the US Dollar’s position.

Closing statement: The GBP/USD pair remains under pressure, driven by soft UK inflation indicators and BoE easing expectations, while improving US-China trade sentiment adds support to the USD. The near-term outlook favors continued downside unless the BoE signals resistance to rate cuts or US data weakens materially.

• XAU/USD Price: The XAU/USD pair rebounded during Wednesday’s European session, recovering from early losses in Asia to trade just above the $4000 level. However, the rebound lacked strong follow-through buying, as investors remained cautious ahead of key US monetary policy signals.
• Fed Rate Cut: Markets widely expect the Federal Reserve to cut rates by 25 bps at its October meeting, lowering the Federal Funds Rate to 3.75%-4.00%. The anticipation of lower yields and a weaker USD provided underlying support for the precious metal.
• Powell’s Comments: Traders are closely watching Fed Chair Jerome Powell’s press conference for clues on the future rate trajectory and broader economic outlook. Any dovish tone could push gold prices higher, while a balanced or hawkish message might limit gains.
• Government Shutdown: Political tension continued as the Senate failed for the 13th time to advance a funding bill, prolonging the US government shutdown. A court injunction preventing the dismissal of federal workers added to the sense of uncertainty, modestly benefiting gold as a safe-haven asset.
• Geopolitical Developments: Positive news from the US-China diplomatic front, where both sides agreed on a framework for a potential trade deal, helped stabilize risk sentiment but slightly reduced demand for traditional safe havens like gold.

Closing statement: Gold remains range-bound above $4000, supported by rate-cut expectations and US political instability, yet capped by improving risk appetite from US-China trade progress. The next decisive move hinges on Fed policy signals and Powell’s tone at the upcoming press conference.

• Crude Oil Price: West Texas Intermediate (WTI) crude traded at $59.80 per barrel early Wednesday in Europe, slightly lower than Tuesday’s close at $60.03 but showing resilience after recent weakness. The market remains cautious ahead of upcoming US inventory data and OPEC+ decisions.
• US Stockpile: The American Petroleum Institute (API) reported that US crude inventories fell by 4 million barrels for the week ending October 24, following a 2.98 million-barrel draw the prior week. The larger-than-expected decline signals strong demand and tightening supply, offering near-term price support.
• OPEC+ Production: Reports from Reuters suggest that OPEC+ may raise December output targets by 137,000 barrels per day, continuing its gradual supply adjustments. While this could slightly pressure prices, the modest scale of the increase limits the bearish impact.
• Five-Year Plan: China’s updated 2026–2030 Five-Year Plan emphasizes domestic consumption growth as a key economic driver. This shift toward demand-led expansion reinforces optimism for long-term oil demand, partially offsetting concerns about near-term oversupply.
• EIA Data: Market participants await the Energy Information Administration (EIA) report later Wednesday for confirmation of the API figures. A deeper stock draw could reinforce bullish momentum, while a surprise build might trigger short-term correction.

Closing statement: WTI crude remains supported by falling US inventories and positive demand sentiment from China, but OPEC+’s possible output increase caps the upside. Traders are awaiting EIA data for direction, with price stability likely near the $60 per barrel level in the short term.

• DAX Price: The DAX trades 0.2% higher at 24,305 points on Wednesday, supported by mild optimism across European markets. Wall Street’s record rally is showing signs of fatigue, creating a more cautious tone for global equities.
• Ifo Outlook: The Munich-based ifo Institute reported that Germany’s economy has remained largely stagnant since 2018, with GDP showing minimal growth. Rising public spending on pensions, education, and infrastructure (up 25% since 2015) contrasts with declining corporate investment, deepening concerns over Germany’s long-term competitiveness.
• Lending Survey: The ECB’s Q3 Bank Lending Survey showed an unexpected tightening of credit standards for firms, citing increased risk perceptions. Corporate loan demand remains weak, while household borrowing rose, highlighting uneven momentum across sectors.
• Consumer Confidence: Across the Atlantic, US consumer confidence rose to 94.6 in October (vs. 93.2 expected), marking a modest improvement but still within a downward trend. The data offered limited global support for risk sentiment.
• Earnings Season: Investors await key corporate earnings from Deutsche Bank, BASF, Mercedes-Benz, and Adidas, which could introduce short-term fluctuations in the index depending on reported profitability and guidance.

Closing statement: The DAX shows marginal gains amid economic headwinds, with optimism tempered by Germany’s weak industrial investment and tighter credit conditions. Corporate earnings and ECB policy signals will remain crucial for near-term direction, while the 24,300 level serves as a key technical pivot.