Daily Analysis 04/11/2025

• GBP/USD Price: The GBP/USD pair remains vulnerable near its lowest level since May 12, pressured by mounting UK fiscal concerns and investor skepticism about the government’s ability to stabilize public finances.
• BoE Rates: The Bank of England is widely expected to keep rates unchanged at 4.0% during Thursday’s policy meeting. However, weaker inflation and wage growth data have prompted speculation that a rate cut may follow soon, possibly in early 2026.
• UK Debt: The UK’s national debt has surged to nearly £3 trillion, expanding at the fastest pace among advanced economies. Annual interest payments exceeding £100 billion highlight the growing strain on public finances, as debt has climbed by £2.5 trillion over the past two decades.
• US ISM PMI: The US ISM Manufacturing PMI for October fell to 48.7, below expectations and underlining continued manufacturing sector weakness. The softer US data helped cap further USD gains, offering some relief to the Pound.
• BoE's Baileys: Traders will focus on BoE Governor Andrew Bailey’s post-meeting remarks, looking for signals on the timing and pace of future rate adjustments. Any dovish tone could trigger further GBP weakness.

Closing statement: The GBP/USD pair remains pressured by UK fiscal fragility and BoE policy uncertainty, though softer US economic data offers modest near-term support. The tone of Bailey’s remarks after the BoE decision will likely determine the pair’s next directional move.

• XAU/USD Price: XAU/USD remains under pressure on Tuesday, failing to gain traction above the $4,000 psychological mark. Renewed selling interest in the European session reflects investor caution amid firmer USD momentum and waning rate-cut expectations.
• Powell’s Comments: Federal Reserve Chair Jerome Powell’s remarks last week curbed hopes for a December rate cut, driving the US Dollar to its strongest level since early August. The shift in tone has diminished gold’s appeal as a non-yielding asset.
• Rate-Cut Odds: According to the CME FedWatch Tool, traders now assign a 65% probability of a rate cut in December, down from 94% just a week earlier. This recalibration in rate expectations has pressured gold prices while supporting Treasury yields.
• Government Shutdown: The US government shutdown is poised to become the longest in history, deepening political and economic uncertainty. While some GOP leaders express optimism for a resolution this week, investors remain cautious, providing limited safe-haven support to gold.
• FOMC Speeches: With no major US data releases scheduled, markets will closely follow FOMC member comments for clues on the policy outlook. Any dovish signals could reignite demand for gold in the short term.

Closing statement: Gold (XAU/USD) remains trapped below $4,000, pressured by stronger USD performance and reduced rate-cut expectations. However, lingering US political gridlock and upcoming Fed commentary could introduce short-term volatility and determine whether gold regains its safe-haven momentum.

• Crude Oil Price: West Texas Intermediate (WTI) oil prices edged lower on Tuesday, trading around $60.50 per barrel, down slightly from Monday’s close of $60.90. The mild pullback reflects profit-taking and cautious sentiment following recent price stability.
• OPEC+ Output: OPEC+’s decision to pause production hikes in early 2026 is expected to limit further downside, as the group aims to balance supply with demand and prevent prices from slipping below key support levels.
• BofA Views: According to Bank of America, traders are likely to interpret the output pause as a stabilizing measure, signaling that OPEC+ acknowledges oversupply risks and is committed to maintaining oil above $50 per barrel.
• Geopolitical Risks: Despite OPEC+’s support, supply-side risks persist amid tightened US sanctions on Russian oil giants Rosneft and Lukoil. The geopolitical backdrop continues to threaten stability in global energy flows.
• Drone Strikes: Reports of a Ukrainian drone attack on the Tuapse port, which ignited a tanker and disrupted Rosneft refinery operations, further underscore the fragility of Russia’s energy infrastructure and could inject short-term volatility into oil markets.

Closing statement: WTI crude oil remains mildly pressured near $60.50, supported by OPEC+’s production restraint but capped by ongoing geopolitical tensions and sanction-driven uncertainty. The market’s next direction hinges on how supply disruptions evolve and whether OPEC+’s strategy successfully cushions against downside risks.

• DAX Price: The German DAX index erased Monday’s advance, falling 1.15% to around 23,850 points on Tuesday. The decline reflects renewed risk aversion as global growth concerns resurface, weighing on investor sentiment.
• Trade Deals: Market confidence following the Trump–Xi accord weakened after US Treasury Secretary Scott Bessent warned that parts of the US economy are already in recession, cautioning that further deterioration could follow if the Federal Reserve delays additional rate cuts.
• Trade Deficit: According to Germany Trade & Invest (GTAI), the trade deficit with China is projected to exceed the 2022 record of €84 billion, underscoring structural imbalances in the country’s trade dynamics and ongoing challenges for German exporters.
• Energy Relief: Germany’s Economy Minister confirmed that a program to lower electricity prices for manufacturers could be launched early next year, pending EU approval. The measure aims to support industrial competitiveness amid persistent energy cost pressures.
• US Data: Later today, investors will monitor US JOLTs job openings and remarks from Fed officials, which could shape risk sentiment and transatlantic equity flows. Economists expect job openings to dip from 7.227 million to 7.2 million in September.

Closing statement: The DAX’s pullback to 23,850 points reflects renewed global growth concerns, weak trade fundamentals, and cautious investor positioning ahead of key US labor data. While domestic policy support offers a buffer, external headwinds from the US and China continue to dominate market direction.