Daily Analysis 17/10/2025

• GBP/USD Price: GBP/USD advances for the third consecutive session on Friday, trading in the mid-1.3400s after rebounding from early-August lows near 1.3250. The sustained recovery reflects improved sentiment and broad U.S. dollar softness.
• Fiscal Policy: The British pound shows mixed performance as markets await clarity on Chancellor Rachel Reeves’s fiscal plans. Investors are focused on potential tax increases and spending cuts to meet the government’s fiscal goals.
• Rate Cut: Weak UK employment data earlier this week revived expectations of gradual Bank of England rate cuts. Traders now see the BoE maintaining a cautious, data-dependent approach through year-end.
• BoE's Mann: BoE MPC member Catherine Mann cautioned against additional rate reductions, arguing that labor market softening remains moderate. Her remarks added nuance to expectations of the BoE’s policy path.
• Fed’s Waller: Across the Atlantic, Fed Governor Christopher Waller reaffirmed his support for measured 25-bp rate cuts to sustain labor market momentum. His comments offered mild support to risk assets, limiting dollar gains.

Closing statement: GBP/USD remains on an upward trajectory, buoyed by a weaker U.S. dollar and tempered BoE dovishness. Fiscal uncertainty in the UK and diverging central bank signals are likely to keep volatility elevated heading into next week.

• XAU/USD Price: Gold prices surged nearly 1% to around $4,370 per ounce, marking the metal’s strongest weekly advance in 17 years. The rally is fueled by mounting fears over deteriorating credit quality in the U.S. economy.
• Fed’s Miran: Federal Reserve official Stephen Miran reiterated his call for a 50-basis-point rate cut at the upcoming FOMC meeting, arguing for stronger monetary support to offset financial sector weakness.
• Trade Tensions: Sentiment remains fragile as U.S.-China trade tensions deepen and Philadelphia Fed manufacturing data shows a sharp October contraction, reinforcing concerns over slowing U.S. growth.
• Tariff Relief: A Bloomberg report indicated the White House may announce tariff relief for the U.S. auto industry later today, potentially softening inflationary pressures and supporting risk sentiment.
• Regional Banks: U.S. regional bank shares slumped after Zions Bancorp and Western Alliance Bancorp disclosed losses linked to fraudulent commercial mortgage funds, further rattling credit markets.

Closing statement: Gold remains well-supported amid safe-haven demand, policy easing expectations, and financial sector stress. The metal’s bullish momentum could persist if U.S. credit concerns and trade tensions continue to intensify.

• Crude Oil Price: West Texas Intermediate (WTI) crude slips early Friday in Europe, trading near $56.55 per barrel, extending losses from the previous session amid a fragile risk environment.
• U.S.-China Tensions: Reports that Washington may impose tariffs up to 500% on Chinese imports linked to Russian oil trade prompted Beijing’s sharp response, warning of “firm countermeasures” to defend its lawful energy ties with Moscow.
• U.S. Support: Ukrainian President Zelenskyj is set to meet President Trump in Washington to request further military aid, including long-range missiles. However, Trump’s recent conciliatory tone toward Putin has clouded expectations for U.S. policy consistency.
• Trump-Putin Meeting: Following a two-hour phone call, Trump confirmed plans to meet President Putin in Budapest within two weeks, raising hopes for diplomatic progress but also introducing fresh geopolitical uncertainty for energy markets.
• China Data: Investors await China’s Q3 GDP report and key September activity data on Monday, with growth expected to decelerate to 4.7% from 5.3% in H1 — a slowdown that could dampen oil demand expectations.

Closing statement: WTI remains under pressure amid intensifying U.S.-China tariff risks, geopolitical crosscurrents, and China’s expected economic slowdown. Unless diplomacy or data surprises positively, the short-term bias stays tilted to the downside.

• DAX Price: The German DAX index trades near 23,750 points, extending its pullback after peaking at 24,771 just over a week ago. Investors remain cautious amid heightened global trade and geopolitical uncertainty.
• EU’s Dombrovskis: EU’s Dombrovskis confirmed that G7 finance ministers shared concerns regarding China’s export restrictions and agreed to coordinate a unified short-term policy response, signaling potential trade frictions ahead.
• China Clarification: The Chinese Ministry of Commerce (MOFCOM) stated that all license applications for civilian rare earth exports will be approved, emphasizing that the new measures do not amount to an export ban. Minister Wang Wentao reiterated that “decoupling is not a realistic or rational option.”
• Trump-Putin Diplomacy: U.S. President Trump announced that he will meet Russian President Putin in Budapest following preparatory meetings led by Secretary of State Marco Rubio, aiming to negotiate an end to the war in Ukraine.
• Continental Report: Continental AG shares gained after reporting strong Q3 results, supported by robust demand in its tire and plastics division, offering a rare bright spot in an otherwise cautious trading environment.

Closing statement: The DAX remains on the defensive as trade tensions, diplomatic uncertainty, and profit-taking after record highs weigh on sentiment. Still, resilient corporate earnings like Continental’s provide some offset to the broader risk aversion.