Daily Analysis 27/07/2026

• GBP/USD Price: The GBP/USD pair is building on Friday's modest rebound from a three-week low and has gained strong upward momentum at the start of the new week.
• BoE policy: Investors remain focused on Prime Minister Andrew Burnham's spending plans, which continue to create uncertainty over the UK's fiscal outlook.
• UK rates: City economists have warned that a sustained increase in oil prices could intensify inflationary pressures and potentially force the BoE to maintain or raise interest rates.
• UK growth: According to the EY Item Club, the Iran conflict could slow the UK economy for approximately two years. The organization reportedly forecasts UK GDP growth of just 0.9% in 2026, down from 1.3% in 2025, reflecting the potential impact of higher energy prices and broader geopolitical uncertainty.
• US-Israel: Israeli Prime Minister Benjamin Netanyahu arrived in Washington amid reports of growing differences with President Donald Trump over the objectives of the Iran conflict.

Closing statement: GBP/USD is recovering strongly from its recent lows, but the Pound faces significant risks from UK fiscal uncertainty, the upcoming BoE decision, and the economic impact of higher energy prices. Geopolitical developments surrounding the Iran conflict could further increase volatility in the pair.

• XAU/USD Price: Gold has pulled back from its session highs but continues to hold the bullish opening gap, trading near the $4,100 level early on Monday.
• DeepSeek: Chinese AI model developer DeepSeek confirmed the suspension of its second fundraising round. The decision was reportedly partly linked to founder Liang Wenfeng's frustration over online reports concerning comments made during the company's first financing round and its reliance on Nvidia chips for AI development.
• Politburo meeting: Investors are awaiting announcements from China's highly anticipated Politburo meeting, which is expected to outline economic policy for the second half of the year. Markets will particularly focus on whether Beijing announces additional support for the AI sector following President Xi Jinping's recent endorsement of China's global expansion of open-source AI.
• US-China: As USMCA trade discussions continue between the US and Mexico, Washington is reportedly pressing Mexico to increase tariffs on Chinese steel and aluminum to match US Section 232 duties.
• Strait of Hormuz: China has reportedly encouraged Pakistan and Iran to explore a path toward reopening negotiations with the US, while Oman has sent a delegation to Tehran to discuss a framework for managing shipping through the Strait of Hormuz.

Closing statement: Gold remains supported near $4,100 as trade tensions and geopolitical uncertainty continue to underpin safe-haven demand. However, potential diplomatic efforts to ease tensions around the Strait of Hormuz could limit further gains if they lead to a sustained reduction in geopolitical risk.

• Crude Oil Price: West Texas Intermediate (WTI) opened with a sharp bearish gap of more than 7%, falling to around $84.80 per barrel during Monday's European session.
• Ammunition concerns: General Dan Caine, Chairman of the Joint Chiefs of Staff, reportedly warned President Trump that continuing the military campaign could place severe pressure on critical US munitions reserves.
• Room for negotiations: US Ambassador to the United Nations Mike Waltz said that US forces remain ready, but President Donald Trump wants to give negotiations more room.
• Hormuz traffic: There are unconfirmed reports of Houthi attacks on Saudi Aramco facilities in Jizan and Yanbu, while shipping traffic through the Strait of Hormuz remains extremely limited.
• Ukrainian strikes: Ukrainian President Volodymyr Zelenskyy said Ukrainian forces struck the Tyumen oil refinery, which has a capacity of approximately 180,000 barrels per day, deep inside Russia. Ukraine also reportedly targeted vessels in the Caspian Sea carrying military cargo linked to Iran, adding another layer of geopolitical risk to the global energy market.

Closing statement: WTI has suffered a dramatic decline as hopes of US-Iran negotiations reduce the immediate geopolitical risk premium. However, severely disrupted shipping through the Strait of Hormuz, potential attacks on Saudi energy infrastructure, and continued strikes on Russian energy assets mean that downside risks remain vulnerable to a sudden reversal.

• DAX 40 Price: Renewed hopes for a ceasefire in the Middle East have improved overall risk sentiment and lifted equity markets at the start of the new trading week. The DAX 40 has consequently recovered strongly and moved comfortably back above the 25,400-point mark.
• German recovery: Germany's PMI data suggest that the economic recovery may be gradually expanding beyond the services sector. However, the Composite PMI weakened from a peak of 52.4 in Q4 2025 to 48.9 in Q2 2026, falling back below the expansion threshold and highlighting continued fragility in the recovery.
• Volkswagen news: Volkswagen suffered a significant decline in profits during the second quarter as the company considers cutting tens of thousands of jobs.
• Upcoming news: Investors will closely monitor quarterly results and updated guidance from companies such as Mercedes-Benz. Germany's IFO Business Climate Index, together with US durable goods orders, could provide further clues about the strength of economic activity in Germany and the global economy.
• Major events: The week ahead is expected to be particularly important for financial markets, with the Federal Reserve's policy meeting taking center stage. Earnings reports from major US technology companies, including Meta, Microsoft, Amazon, and Apple, could also significantly influence global equity sentiment and the DAX.

Closing statement: The DAX 40 has regained momentum above 25,400 as hopes of a Middle East ceasefire improve risk appetite. However, weak German growth momentum, Volkswagen's restructuring challenges, and a busy week of central-bank decisions and corporate earnings could lead to increased volatility.