Daily Analysis 20/10/2025

• GBP/USD Price: The GBP/USD pair begins the week trading just above 1.3400, showing limited momentum after Friday’s broad swings. Market participants remain cautious, awaiting fresh catalysts amid a quiet data calendar.
• UK Labor Data: Last week’s disappointing UK employment figures reinforced expectations that the Bank of England may opt for further gradual rate cuts, as policymakers navigate a slowing economy and weakening job market.
• Trade Calm: The U.S. Dollar stabilized as US-China trade tensions eased, with President Trump signaling optimism about renewed Chinese soybean purchases, suggesting a possible thaw in trade relations.
• Mineral Export: Beijing introduced new export approval requirements for products containing rare earth minerals, highlighting its strategic leverage in global supply chains. This move added an underlying tone of caution in markets.
• Light Calendar: With no major economic releases scheduled from either the UK or the US, short-term direction for GBP/USD will largely depend on broader dollar sentiment and risk appetite.

Closing statement: GBP/USD is likely to trade range-bound above 1.3400, with the dollar’s tone and market sentiment driving near-term moves. Weak UK fundamentals suggest upside potential remains limited unless risk appetite strengthens.

• XAU/USD Price: Gold (XAU/USD) begins the week slightly lower, stabilizing after a sharp pullback from Friday’s all-time high. The market remains cautious but retains underlying support from persistent macroeconomic uncertainty.
• Powell Concerns: Fed Chair Jerome Powell emphasized that a tight labor market continues to complicate the balance between employment and inflation goals, suggesting policymakers remain vigilant as they assess future monetary tightening.
• US-China: Treasury Secretary Scott Bessent and China’s Vice Premier He Lifeng are set to meet to ease trade and financial tensions, paving the way for a potential Trump–Xi summit later in the month, which could impact market risk sentiment.
• Blackout Period: With the FOMC meeting approaching, officials have entered a communication blackout, reducing forward guidance and leaving traders to rely on existing data and positioning to gauge the next policy move.
• Government Shutdown: The shutdown reaches its 19th day, with repeated Senate failures to end the stalemate. The extended closure is adding uncertainty to the US growth outlook and providing some support for gold as a safe haven.

Closing statement: Gold remains in a consolidation phase after its record surge, balancing between safe-haven demand and profit-taking pressure. If the shutdown drags on and US-China talks stall, XAU/USD could resume its upward momentum toward recent highs.

• Crude Oil Price: West Texas Intermediate (WTI) crude trades around $56.65 per barrel, down from Friday’s close of $57.24, as weak risk sentiment and geopolitical tensions weigh on prices early in the European session.
• Drone Strikes: Attacks on Gazprom’s gas processing plant and Novokuibyshevsk refinery highlight escalating risks to Russian energy infrastructure, yet market reaction remains contained amid ample global supply.
• China’s Growth: Q3 GDP grew 4.8% y/y, down from 5.2% in Q2, while industrial output beat forecasts at 6.5%, signaling mixed demand prospects for the world’s largest oil importer.
• Middle East: Renewed violence between Israel and Hamas undermines the fragile ceasefire and raises concerns about potential regional supply disruptions, although immediate production risks remain limited.
• Oil Tensions: President Trump warned of massive tariffs on India over continued Russian oil imports, despite Prime Minister Modi’s assurances to end purchases—injecting further geopolitical risk into energy markets.

Closing statement: WTI remains under downward pressure as mixed economic data and heightened geopolitical uncertainty compete with resilient global supply. Short-term direction will hinge on developments in Ukraine–Russia tensions and US–India trade relations.

• DAX Price: The German DAX index gains 0.7%, trading around 24,065 points in early Monday trade, as sentiment remains cautiously optimistic with investors watching the 24,000 level as a key psychological barrier.
• Lithium Discovery: Neptune Energy’s lithium find in Saxony-Anhalt could represent a breakthrough for Germany’s raw-material security and potentially position the country as a key player in the global critical minerals market.
• Producer Prices: Germany’s PPI fell 0.1% m/m (vs 0.0% expected), largely due to a 0.3% drop in energy prices, signaling easing cost pressures for producers and providing mild relief for the inflation outlook.
• Inflation News: The HICP and core inflation readings for September confirmed prior estimates, supporting the view that price stability is improving, though the ECB is likely to stay cautious before signaling any policy shift.
• Daimler Truck: Jefferies reaffirmed its Buy rating on Daimler Truck with a target of €50, citing solid fundamentals and resilience within the European industrial sector as supporting factors.

Closing statement: The DAX shows modest upside momentum driven by optimism over Germany’s potential lithium breakthrough and stable inflation figures. However, lingering concerns over energy prices and industrial demand could temper gains in the short term.