Daily Analysis 19/01/2026

• GBP/USD Price: GBP/USD edges higher toward 1.3400, supported by mild USD weakness in early European trading.
• Trade tensions: The pair faces uncertainty after President Trump announced a 10% tariff on UK and several EU exports, effective February 1, linked to the Greenland dispute. This has injected fresh geopolitical risk into FX markets.
• UK response: Prime Minister Keir Starmer confirmed the UK will engage directly with Washington, attempting to defuse tensions after Trump’s warning that global security is at stake.
• Domestic concerns: A report from the Resolution Foundation highlighted stagnating UK living standards, noting GDP per capita remains about 15% below peers such as Germany and France, reinforcing concerns over long-term growth potential.
• Data ahead: Traders are positioning ahead of UK employment and CPI figures, which could significantly influence expectations for the Bank of England’s policy path.

Closing statement: GBP/USD is finding short-term support from broad USD softness, but upside appears fragile amid rising trade tensions and weak domestic fundamentals. With key UK labor and inflation data ahead, the pair is likely to remain volatile, with upside limited unless the data strengthens expectations that the BoE can delay rate cuts.

• XAU/USD Price: Gold surged to a fresh all-time high near $4,700, driven by a sharp rise in risk aversion at the start of the week. Safe-haven demand intensified as investors sought protection from escalating geopolitical and macroeconomic uncertainty.
• USD weakness: Renewed trade war fears have undermined confidence in US assets, pushing the US Dollar off recent highs. The softer dollar has provided a direct tailwind to gold prices, reinforcing the metal’s bullish momentum.
• Geopolitical risk: Iran’s warning that any attack on Supreme Leader Khamenei could trigger full-scale war has significantly increased geopolitical risk premiums. This development has strengthened gold’s appeal as a hedge against global instability.
• Fed leadership: Trump’s remarks signaling a potential replacement for Fed Chair Jerome Powell reduced expectations for aggressive monetary easing. While this slightly tempers gold’s upside via rates expectations, political interference concerns continue to support safe-haven flows.
• Key data: Markets are now focused on the US PCE inflation report and final Q3 GDP figures, which could influence expectations for Fed policy and determine whether gold can sustain its breakout above previous highs.

Closing statement: Gold remains firmly bullish, supported by geopolitical stress, USD weakness, and safe-haven demand. While reduced expectations for aggressive Fed easing may slow gains, any downside appears limited, with prices likely to remain elevated or extend higher if macro and political uncertainty persists.

• Crude Oil Price: WTI is holding around $59.00/bbl in early European trade on Monday, with limited directional movement after recent bouts of volatility and losses, as markets digest mixed fundamentals and geopolitical headlines.
• Ukraine war: Ukrainian officials warned that Russia may be contemplating strikes on sites linked to nuclear power stations, underscoring the ongoing conflict and keeping geopolitical risk premiums in play.
• Iran tensions: Supreme Leader Ayatollah Khamenei noted that thousands were killed in protests, keeping geopolitical risk in the Middle East on traders’ radars, even without recent major escalation in Iran’s oil regions.
• Venezuela export: International oil executives are lobbying for hydrocarbon law changes in Venezuela that would allow foreign partners to export oil they produce directly—potentially altering future supply flows if enacted.
• Inventory report: Markets are bracing for the American Petroleum Institute (API) crude oil weekly stockpiles report on Tuesday, which could provide fresh impetus for price direction depending on supply developments.

Closing statement: WTI remains in a consolidation phase near $59, with geopolitical uncertainty and potential legal changes in Venezuelan oil offering mixed support. Near-term trading may stay range-bound between roughly $58.00 and $60.50, with upside limited unless API data surprises with a large draw and geopolitical tensions intensify. A weaker supply print or easing conflict fears could prompt a pullback toward $57.50–$58.00.

• DAX Price: The DAX opened with a gap lower and slipped below 25,000, pulling back after printing fresh all-time highs last week as investors lock in profits.
• Fed rate: Markets are increasingly convinced the Fed will keep rates unchanged at the January 27–28 meeting, with pricing near 95% probability, supporting risk assets but limiting upside momentum.
• US data: US industrial production rebounded strongly in December (+0.4% m/m) and capacity utilization rose, reinforcing the view of a resilient US economy despite tighter financial conditions.
• China developments: China met its 2025 GDP target (4.5% y/y), but weak domestic demand and ongoing property sector stress continue to weigh on global growth sentiment and export-linked European equities.
• Canada-China: The meeting between Canada’s Mark Carney and China’s Xi Jinping signals renewed diplomatic engagement, though it has limited direct short-term impact on German equities.

Closing statement: The DAX is undergoing a healthy consolidation after record highs, with momentum cooling but no major technical damage yet. As long as the index holds above the 24,700–24,800 support zone, dips may remain shallow. Upside potential remains intact, but near-term movement is likely range-bound, with global growth signals from China and upcoming macro data determining whether the index can resume its bullish trend or enter a deeper corrective phase.