Daily Analysis 30/06/2025

• GBP/USD Price: The GBP/USD pair extends its winning streak into a fourth consecutive session, trading above the 1.3700 mark during Thursday’s European session. The move reflects persistent weakness in the US Dollar and positive domestic developments.
• UK-US Trade: The UK government confirmed the UK-US trade deal is now officially active, providing significant support to British exporters. UK car manufacturers gain access to reduced 10% tariff quotas, and the aerospace sector benefits from tariff removals on engines and aircraft parts, strengthening economic prospects.
• Political Tensions: UK Prime Minister Keir Starmer faces internal party turmoil, as he retreats on welfare reform plans to avoid a major rebellion within Labour. Over 100 MPs opposed proposed cuts of £5 billion per year, highlighting political fragility despite economic optimism.
• US Consumer Sentiment: The University of Michigan Consumer Sentiment Index rose modestly to 60.7 in June from 60.5, suggesting a cautiously optimistic US consumer outlook. This improvement offers only limited immediate support to the US Dollar.
• Fed's Kashkari: Minneapolis Fed President Neel Kashkari noted possible inflation risks but emphasized that current data show progress toward the 2% core inflation target, reinforcing a wait-and-see approach for US monetary policy.

Closing statement: GBP/USD stays firm amid favorable trade news and a weaker US Dollar, though domestic political tensions could pose medium-term risks. Market focus will shift to further UK data and Fed commentary to guide the next move.

• XAU/USD Price: Gold price sustains its rebound from recent monthly lows, benefiting from broad US Dollar weakness early Monday. Despite this recovery, it remains capped below the $3,300 mark, highlighting cautious market sentiment.
• EU Tarrifs: According to the Wall Street Journal, the EU is considering reducing tariffs on US imports to improve relations with President Trump. This development reduces global trade tensions, which can weigh on gold’s safe-haven appeal.
• US Data: US data showed surprising weakness in May, with Personal Spending falling for the second time this year and Personal Income dropping by 0.4% — the largest decline since September 2021. These figures point to a potential cooling in economic momentum.
• Inflation Expectations: US inflation expectations eased slightly, with one-year inflation seen at 5% (down from 5.1%) and five-year inflation at 4% (down from 4.1%). This shift bolsters expectations for a more accommodative Fed policy stance.
• Market Bets: Weak income and spending data, along with falling inflation expectations, fuel market speculation that the Fed could cut rates sooner and more aggressively than anticipated, further pressuring the US Dollar and supporting gold.

Closing statement: Gold remains underpinned by dollar softness and dovish Fed expectations, but still struggles to break decisively higher amid trade optimism and technical resistance. Market participants will watch for further US data to clarify the rate outlook.

• Crude Oil Price: West Texas Intermediate (WTI) oil prices rose slightly, trading around $64.60 per barrel in early European hours on Monday, up modestly from Friday’s close. The move reflects steady buying interest despite ongoing global uncertainties.
• US Trade Deal: Market sentiment remains cautious amid fresh concerns over US trade agreements, particularly with Japan. President Trump cast doubt on his 'big, beautiful' spending bill being passed by his July 4 target date, adding to investor wariness.
• US-China Trade: In contrast, US-China tensions eased somewhat, as both countries resolved issues related to rare earth mineral and magnet shipments. US Treasury Secretary Scott Bessent confirmed this on Friday, reducing immediate supply chain risks.
• Canada’s Tax Shift: Canada announced plans to rescind its digital services tax, aiming to facilitate broader trade negotiations with the US. This move is seen as constructive for North American trade relations and could indirectly support energy demand outlooks.
• Upcoming Events: Traders will closely watch Tuesday’s US JOLTS Job Openings data and Fed Chair Powell’s speech at the ECB Forum in Sintra. Insights into labor market health and future monetary policy will likely influence oil price dynamics.

Closing statement: WTI remains supported by improved US-China trade relations and Canadian tax moves, though upside is tempered by US domestic spending and trade uncertainties. Near-term price action will hinge on upcoming US economic data and Powell’s remarks.

• DAX Price: The DAX rose sharply by 1.62% on Friday, June 27, closing at 24,033 and building on Thursday’s 0.64% increase. Strong momentum pushed the index above the key 24,000 mark for the first time, reflecting growing investor optimism.
• Retail Sales: Despite market optimism, German Retail Sales dropped by 1.6% MoM in May, missing expectations for a 0.5% rise. This marks a deeper decline following April’s revised 0.6% drop, signaling potential weakness in domestic consumption.
• Investment Plan: Germany’s new CDU/CSU-SPD coalition has abandoned its strict “debt brake” rule, announcing a massive €850 billion investment plan through 2029. This includes €500 billion for infrastructure, energy, and digital transition, and €300 billion to increase defense spending to 3.5% of GDP, aligning with NATO’s new target.
• Index Stocks: Auto and China-sensitive sectors surged, fueled by positive US-China trade developments. Daimler Truck Holding soared 6.14%, BMW rose 5.32%, and Mercedes-Benz Group gained 4.85%, with Volkswagen and Porsche also posting strong performances.
• Inflation Data: Attention now shifts to German inflation figures due today, with forecasts pointing to an annual rate increase from 2.1% in May to 2.2% in June. The data will be closely watched for clues on the European Central Bank’s future policy path.

Closing statement: The DAX rally is underpinned by fiscal stimulus hopes and trade optimism, though weak retail data highlights risks to domestic demand. Upcoming inflation data will be pivotal for gauging the ECB’s next steps.