Daily Analysis 22/01/2026

• GBP/USD Price: GBP/USD lost momentum after a two-day rally and is now hovering above 1.3400, moving in a tight range as markets digest mixed signals.
• UK inflation: The headline CPI rose to 3.4% YoY, beating expectations and offering some support to the pound, as it reduces the likelihood of near-term BoE easing.
• Geopolitical noise: Reports of a potential US–Greenland framework deal added to broader geopolitical uncertainty, though UK officials stressed Britain will not be pressured by potential US tariffs.
• Policy stance: UK Chancellor Rachel Reeves struck a confident tone, stating the UK would not be “buffeted around” by US trade actions, helping limit downside pressure on GBP.
• Key data: Markets now focus on US Q3 GDP (final), jobless claims, and the Core PCE inflation report, which could reignite USD volatility.

Closing statement: GBP/USD remains range-bound as UK inflation offers mild support but broader risk sentiment and US data dominate near-term direction. A strong US PCE print could pressure the pair lower, while softer inflation may allow GBP/USD to retest higher levels above 1.3450.

• XAU/USD Price: Improved global risk appetite after Trump’s U-turn on Greenland has triggered profit-taking in gold, pulling prices away from recent record highs.
• Witkoff-Putin: US Special Envoy Steve Witkoff announced a new meeting with Russian President Vladimir Putin that’s set to take place on Thursday amid progress with discussions over a US-led 20-point Ukraine peace plan.
• Trump on Ukraine: Trump said on Wednesday that Ukrainian President Volodymyr Zelensky and Putin were now at a point where they could reach a deal to end the war, further undermining the precious metal.
• Reuters poll: According to a Reuters poll, a majority of economists expect that the US Federal Reserve will hold its key interest rate through the end of this quarter and possibly until Chair Jerome Powell's tenure ends in May.
• Rates speculation: Despite the Fed’s cautious stance, markets still price in up to two rate cuts in 2026, keeping medium-term gold demand supported.

Closing statement: Gold is retreating from record highs as geopolitical tensions ease and risk appetite improves, but downside remains limited. With rate-cut expectations still alive and USD upside capped, XAU/USD is likely to consolidate rather than reverse sharply, with dips potentially attracting fresh buyers near key support levels.

• Crude Oil Price: WTI trades around $60.60, supported by temporary production halts at Kazakhstan’s Tengiz and Korolev oilfields after fires disrupted power generation, tightening near-term supply.
• Oversupply concerns: The IEA reiterated that global oil supply is expected to exceed demand this year, reinforcing longer-term bearish pressure despite short-term supply shocks.
• US inventories: Reports of a 3 million barrel increase in US crude stocks last week add to concerns about oversupply, limiting upside momentum.
• Venezuelan crude: Purchases by Valero and Phillips 66 of Venezuelan barrels highlight improving supply flows following political developments, adding further supply-side pressure.
• Energy transition: EU wind and solar power generation surpassing fossil fuels for the first time underscores weakening structural demand for oil in Europe over the medium term.

Closing statement: WTI remains supported near $60 due to short-term supply disruptions, but upside looks limited as rising inventories, surplus supply expectations, and growing renewable energy usage weigh on the outlook. Unless geopolitical risks escalate further, oil prices are likely to stay range-bound with a slight bearish bias in the near term.

• DAX Price: The index is trading around 24,860, holding steady after recovering part of its recent losses, suggesting a pause in downside momentum.
• Defense stocks: European defense names came under pressure after Trump softened his stance on Greenland, easing geopolitical risk. Rheinmetall slid 2.3%, marking its weakest level in roughly two weeks.
• Energy transition: Allianz Global Investors acquired a 20.25% stake in the EMYN offshore wind farm, highlighting continued long-term commitment to renewable infrastructure across Europe.
• Volkswagen News: VW shares jumped after reporting stronger-than-expected 2025 cash flow, helping offset broader concerns around China demand, US tariffs, and Porsche brand pressure.
• EU news: Markets await the ECB December meeting minutes and flash consumer confidence data. While traders will look for clues on the next rate move, expectations are for a limited immediate market impact.

Closing statement: The DAX remains range-bound, supported by strong corporate earnings and investment flows but capped by easing geopolitical risk and uncertainty around ECB policy. Unless the ECB minutes deliver a surprise, the index is likely to continue consolidating near current levels, with stock-specific moves driving performance rather than macro momentum.