Daily Analysis 13/02/2025

• GBP/USD Price: The GBP/USD pair trades around 1.2500 during Thursday’s European session, supported by improving risk sentiment and strong UK economic data. The pound is gaining ground as traders digest a series of upbeat domestic reports.
• UK GDP Data: The UK economy expanded by 0.1% quarter-on-quarter in Q4 2024, beating expectations of a 0.1% contraction. On a year-over-year basis, GDP grew by 1.4%, well above the forecast of 1.1% and the previous quarter’s revised 1% increase. This positive growth data provides temporary relief amid lingering concerns over the UK’s economic outlook.
• BoE’s Pill: Bank of England Chief Economist Huw Pill warned against rushing into interest rate cuts, emphasizing the need for a cautious approach.
• BoE’s Mann: BoE MPC member Catherine Mann expressed concerns about weakening domestic demand, highlighting the need for more accommodative financial conditions.
• Other UK Data: December’s economic indicators delivered positive surprises: the Index of Services rose 0.2% on a three-month basis, while Industrial Production and Manufacturing Production increased by 0.5% and 0.7%, respectively—both surpassing market expectations. These results reflect a modest improvement in key sectors.

Closing statement: GBP/USD remains supported by solid UK economic data and a cautious BoE stance. However, broader market sentiment and US inflation figures will likely dictate the pair’s next move.

• XAU/USD Price: The XAU/USD price remains supported amid growing concerns over global trade tensions and rising inflation. Technically, the daily Relative Strength Index (RSI) remains in overbought territory, signaling caution for traders anticipating further gains.
• Trade War Fears: Investor concerns over a potential global trade war escalate after US President Donald Trump’s announcement of new tariffs on commodity imports. This uncertainty continues to drive demand for safe-haven assets like gold.
• US Inflation Data: The US Consumer Price Index (CPI) rose 0.5% in January—the highest monthly increase since August 2023—bringing the annual rate to 3%. Core CPI, which excludes food and energy, climbed 0.4% month-on-month and 3.3% year-over-year, surpassing market expectations of 3.1%. The data signals underlying inflationary pressures in the US economy.
• Atlanta Fed President: The Atlanta Fed President highlighted the strength of the US labor market and the surprising resilience of GDP growth. However, the elevated inflation figures underscore the need for continued vigilance, keeping rate cut expectations subdued.
• Fed Expectations: Following the stronger-than-expected inflation data, market participants now expect just one rate cut from the Federal Reserve by the end of the year. The yield on the benchmark 10-year US Treasury bond recorded its largest one-day rise since December, which could temper gold’s further upside in the short term.

Closing statement: Gold prices remain well-supported by safe-haven flows and inflation concerns. However, with the RSI in overbought territory and rising bond yields, the potential for a near-term pullback cannot be ignored. Traders will closely watch upcoming US economic data and Fed commentary for fresh cues.

• WTI Oil Price: West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $70.50 during the early European session on Thursday.
• Geopolitical Developments: Diplomatic efforts to end the Russia-Ukraine conflict ease supply concerns. US President Donald Trump initiated calls with Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskiy to discuss potential peace resolutions, weighing on crude prices.
• US Crude Inventories: The latest report from the US Energy Information Administration (EIA) showed that crude oil stockpiles increased by 4.07 million barrels for the week ending February 7. Rising inventories signal weaker demand, limiting any significant upside for WTI in the short term.
• Fed Commentary: Federal Reserve Chair Jerome Powell’s remarks contributed to crude oil’s decline. Powell emphasized that recent inflation data shows progress, but further tightening may be necessary to maintain price stability, which raised concerns over slower economic growth and reduced energy demand.
• OPEC Outlook: OPEC left its 2025 and 2026 global oil demand forecasts unchanged, maintaining an optimistic view for long-term consumption. The organization continues to expect solid demand growth in 2025, although near-term supply-demand dynamics remain volatile.

Closing statement: WTI remains under pressure due to rising inventories and a hawkish Fed, but optimism surrounding peace talks and OPEC’s steady demand outlook could provide support. Traders should watch for any new geopolitical developments and US oil inventory updates.

• DAX Price: The DAX continues its impressive rally, trading near 22,500 and maintaining a strong uptrend. However, the Relative Strength Index (RSI) above 74 indicates overbought conditions, suggesting a potential pullback or consolidation in the near term.
• Germany’s Inflation: Germany’s January inflation rate came in at 2.3% year-on-year, easing from December’s 2.6%. The decline in inflation is a positive development, potentially providing relief to consumers and businesses while reducing pressure on the European Central Bank (ECB) for further tightening.
• Ukraine Peace Talks: Hopes for a peaceful resolution to the Ukraine conflict lifted investor optimism. US President Donald Trump’s call with Russian President Vladimir Putin led to an agreement to initiate immediate negotiations, spurring confidence in European markets and fueling the DAX’s upward momentum.
• Fed’s Rate Approach: Federal Reserve Chair Jerome Powell reiterated a patient approach to monetary policy, emphasizing that rates would likely remain steady throughout 2025. This stance, combined with moderating inflation, supports the bullish outlook for equities, including the DAX.
• US Data: Traders are keeping a close eye on Thursday’s US economic data, including the Producer Price Index (PPI) and weekly jobless claims. Any surprises could impact the US Dollar and broader market sentiment, influencing European equities.

Closing statement: The DAX’s record-breaking run is fueled by hopes for geopolitical stability and easing inflation. While the technical picture suggests caution due to overbought conditions, positive global developments and steady monetary policy could support further gains.