Daily Analysis 20/01/2026

• GBP/USD Price: GBP/USD is consolidating around 1.3440, holding onto modest gains from the previous session as markets await clearer macro direction.
• Labor market: The ILO unemployment rate remained at 5.1%, signaling a still-soft labor market. However, the rise in jobless claims (+17.9K) highlights weakening employment momentum and limits upside for the pound.
• Monetary policy: Morgan Stanley now expects two BoE rate cuts in 2026 (June and September) instead of earlier cuts, offering mild support to GBP by pushing back easing expectations.
• Blackout period: With Fed officials entering blackout mode ahead of the January FOMC meeting, near-term USD moves are likely to be driven more by data than rhetoric.
• Policy outlook: While the BoE remains cautious, the absence of fresh hawkish signals and soft UK labor data cap sterling’s upside.

Closing statement: GBP/USD remains range-bound, supported by delayed BoE easing expectations but weighed down by weakening UK labor conditions. As long as US data does not surprise strongly to the upside, the pair may hold above 1.3400, though upside toward 1.3500 looks limited without stronger UK macro momentum. A break below 1.3370 would expose downside risks toward 1.3300.

• XAU/USD Price: Gold extends its bullish momentum for a second straight session, surging to a fresh all-time high near $4,718, supported by strong safe-haven demand.
• Fed chair: President Trump’s comments suggesting a successor to Fed Chair Powell other than Kevin Hassett added uncertainty to the policy outlook, offering little support to the US Dollar and indirectly benefiting gold.
• Geopolitical escalation: Russia’s intensified drone and missile attacks on Ukraine’s energy infrastructure have heightened geopolitical risks, reinforcing gold’s appeal as a hedge.
• China rates: The People's Bank of China kept the one-year and five-year loan prime rates unchanged at 3% and 3.5%, respectively.
• Japan election: PM Takaichi called a snap election, pledging to suspend the 8% food levy for two years to ease rising living costs. Parliament will be dissolved on 23 January, and the election, set for 8 February, will decide all 465 lower house seats.

Closing statement: Gold remains strongly bullish, supported by geopolitical risks, political uncertainty, and a softer USD backdrop. As long as risk aversion persists, XAU/USD may attempt further gains toward new all time highs. However, given the extended rally, short-term pullbacks toward $4,650–4,680 cannot be ruled out before another leg higher.

• Crude Oil Price: WTI is trading slightly lower around $59.15, consolidating after recent volatility as markets await fresh catalysts.
• Iran tensions: While there weren’t escalating tensions in Iran over the weekend, Supreme Leader Ayatollah Khamenei said that 5,000 people were killed in this month's anti-government protests, per Reuters.
• Trump on Iran: US President Donald Trump seems to have stepped back from his earlier threats of military action against Iran on the back of Tehran’s brutal crackdown on protests.
• Supply risks: Kazakhstan’s largest oilfield (Tengiz) has suffered a temporary shutdown following fire damage to key infrastructure, adding supply-side uncertainty and offering some support to prices.
• Inventory numbers: Traders are cautious ahead of the API crude stockpiles report, which could influence short-term direction amid concerns over global supply-demand balance.

Closing statement: WTI remains range-bound, supported by supply disruptions in Kazakhstan but weighed down by easing geopolitical fears and demand-side uncertainty. A bullish surprise in the API inventory data could push prices toward $60.50–61.00, while a larger-than-expected build may drag WTI back toward $58.50–58.00 in the near term.

• DAX Price: The DAX continues to retreat from last week’s record highs, trading around 24,820, as profit-taking and political uncertainty weigh on sentiment.
• PPI numbers: German producer prices fell 1.2% y/y in 2025, marking a second consecutive annual decline. However, the drop is largely driven by lower energy prices rather than broad-based deflationary pressure.
• Growth outlook: The January ZEW survey is expected to show weak current conditions but improving expectations, reflecting early signs that fiscal spending is finally supporting growth after a soft 2025.
• Trade risks: German business groups criticized President Trump’s latest tariff threats, underlining concerns over rising trade tensions, especially after remarks linked to Denmark and Greenland.
• Geopolitical focus: Markets are watching closely as Trump prepares to speak on Greenland at the World Economic Forum, while EU leaders meet in Brussels for an emergency summit, adding another layer of uncertainty.

Closing statement: The DAX is undergoing a technical pullback after record highs, driven by geopolitical risk and cautious sentiment rather than a deterioration in fundamentals. Improving growth expectations and easing inflation remain supportive, but near-term direction will depend on political developments and risk appetite. A sustained hold above 24,700 could stabilize the index, while further geopolitical escalation may open the door toward 24,400–24,500 before buyers re-emerge.