Daily Analysis 13/10/2025

• GBP/USD Price: The GBP/USD pair trades slightly lower near 1.3330 in early European hours on Monday. The pair’s tone remains cautious as traders assess fiscal and growth concerns in the UK alongside geopolitical developments abroad, while the US dollar retains a mild bid tone amid risk aversion.
• Fiscal Policy: Market participants anticipate that UK Chancellor Rachel Reeves will raise taxes again in the Autumn Statement scheduled for late November. This expectation reflects the government’s ongoing effort to meet fiscal targets amid rising public spending pressures, but it could also temper consumer demand and weigh on medium-term growth prospects.
• Business Confidence: A new survey of UK finance leaders indicates that corporate confidence is deteriorating, as rising costs continue to squeeze profit margins. Many firms reportedly fear that Labour’s pro-growth agenda is failing to deliver tangible results, highlighting growing skepticism about the government’s economic management.
• Global Trade: On the geopolitical front, China defended its export restrictions on rare earth elements and production equipment, framing them as countermeasures to US policies. Although Beijing refrained from new tariffs, the move underscores ongoing trade tensions that continue to shape global risk sentiment and indirectly support safe-haven demand for the dollar.
• Data Ahead: Traders now turn their attention to UK employment data for the three months ending in August, due Tuesday. Labor market conditions will be closely watched for signs of wage pressures or softening employment, both of which could influence the Bank of England’s policy stance and short-term sterling direction.

Closing statement: The GBP/USD pair remains under mild pressure near 1.3330, with fiscal uncertainty and waning business confidence limiting sterling’s upside. Upcoming labor data will be crucial in determining whether the pair can stabilize or extend its decline amid a firm US dollar backdrop.

• XAU/USD Price: Gold (XAU/USD) continues its upward trajectory, reaching a new record high around $4,078 in early Asian trading on Monday. The move extends last week’s bullish momentum as investors flock to safe-haven assets amid ongoing US political gridlock and geopolitical tensions, with the overall tone remaining constructive for gold.
• Technical Outlook: Friday’s rebound from a three-week ascending trendline reaffirmed bullish control over the market. However, with short-term indicators showing overbought conditions, traders may look for a brief consolidation or shallow pullback before considering new long entries. Despite this, the broader technical bias remains firmly positive.
• Political Uncertainty: The US government shutdown, now entering its third week, continues to weigh on investor sentiment. The prolonged deadlock in Congress and the Senate’s delay in voting until Tuesday have amplified fiscal uncertainty, prompting a shift into gold as a defensive hedge.
• Geopolitical Tensions: Heightened global tensions also lend support to gold. Former President Trump warned of potentially supplying long-range Tomahawk missiles to Ukraine should Russia fail to engage in peace talks, signaling a possible escalation in the Russia-Ukraine conflict. Such developments are bolstering demand for safe-haven assets.
• Monetary Policy: According to the CME FedWatch Tool, markets are pricing in a 96% probability of a 25-basis-point Fed rate cut in October, followed by an 87% chance of another cut in December. The expectation of looser monetary policy continues to undermine the US dollar and Treasury yields, reinforcing gold’s appeal.

Closing statement: Gold’s rally to record highs is supported by US fiscal dysfunction, geopolitical risk, and strong rate-cut expectations. While near-term technical signals suggest caution, the fundamental backdrop remains overwhelmingly bullish, positioning XAU/USD for further gains after potential short-term consolidation.

• Crude Oil Price: West Texas Intermediate (WTI) crude oil extended its upward momentum early Monday, trading around $59.30 per barrel, gaining over 2% from Friday’s close at $57.91. The rise comes as traders weigh strong Chinese import data against renewed US sanctions and geopolitical developments impacting global supply dynamics.
• China’s Oil Demand: Fresh customs data from Beijing showed that China’s crude oil imports rose 3.9% in September, averaging 11.5 million barrels per day. The sustained strength in Chinese demand — the world’s top oil importer — underscores resilient consumption trends and offers support to oil prices despite lingering global growth concerns.
• Trade and Supply: China’s decision to expand export controls on rare earths last Thursday is seen as a strategic response to Washington’s trade measures, adding further strain to US-China relations. The move heightened market uncertainty and may influence broader commodity flows, indirectly supporting crude prices through risk sentiment shifts.
• Sanctions Impact: Oil flows from Iran are likely to remain under pressure after the US imposed new sanctions on a Chinese refiner, import terminal, and related entities involved in Iranian crude trade. The additional restrictions are expected to tighten regional supply and contribute to price stabilization above recent lows.
• Venezuela News: In a notable geopolitical twist, Venezuelan President Nicolás Maduro’s administration reportedly offered to open oil and gold projects to US companies, seeking to ease tensions with Washington and avert potential confrontation. While still at a preliminary stage, such talks may reshape trade alignments and alter medium-term supply expectations.

Closing statement: WTI crude oil’s rebound above $59 reflects a blend of stronger Chinese demand, geopolitical constraints on supply, and diplomatic maneuvering across key producing regions. While near-term volatility may persist, the balance of risks tilts bullish, supported by demand resilience and tightening supply from sanctioned producers.

• DAX Price: The DAX opened the week with a mild recovery, trading 0.4% higher around 24,340 points on Monday after the recent tariff-driven selloff. The rebound suggests some risk appetite returning as investors look past short-term trade disruptions and focus on Germany’s improving macro outlook.
• Inflation Dynamics: Data from Destatis showed wholesale price inflation accelerating to 1.2% year-on-year in September, up from 0.7% in August and 0.5% in July. The steady pickup in prices underscores rising cost pressures within Germany’s supply chain, though the increase remains moderate compared to earlier inflation peaks, offering some relief to policymakers.
• Economic Outlook: Germany’s Economy Ministry upgraded its 2025 GDP growth forecast to 0.2%, supported by a multi-year public investment drive targeting infrastructure, digitalization, and energy transformation. Chancellor Friedrich Merz’s “Autumn of Reforms” agenda emphasizes labor market participation and electric vehicle competitiveness, aiming to address structural weaknesses and revive industrial momentum.
• Market Sentiment: Investor confidence appears cautiously optimistic ahead of the ZEW Economic Sentiment Survey, where analysts expect Germany’s index around 39–42 and Eurozone sentiment near 30. A stronger-than-expected reading could extend the DAX’s recovery and signal renewed faith in regional growth prospects amid global headwinds.
• EU Budget: Germany remained a net contributor to the EU budget in 2024, paying roughly 0.4% of its gross national income (€18 billion) more than it received. This continued fiscal burden reflects Germany’s role as the bloc’s financial backbone, though it also limits domestic fiscal flexibility at a time of modest growth and reform spending.

Closing statement: The DAX’s rebound signals early signs of stabilization after recent trade tensions, underpinned by firm public investment plans and moderately positive sentiment expectations. While structural and fiscal challenges persist, improving data and reform momentum provide a cautiously constructive backdrop for German equities heading into mid-October.