Daily Analysis 17/03/2025

• GBP/USD Price: The GBP/USD pair extends its losing streak for the third consecutive session, trading around 1.2930 during European hours on Monday, pressured by weak domestic data and US Dollar strength.
• Technical Setup: Despite recent losses, technical analysis of the daily chart points to a bullish bias as the pair continues to move within an ascending channel, suggesting potential for recovery.
• UK Economic Data: The UK economy unexpectedly contracted by 0.1% in January, highlighting economic fragility and dampening market sentiment toward the British Pound.
• BoE Rate Outlook: Investors anticipate that the Bank of England (BoE) will cut rates more slowly than other major central banks, including the Federal Reserve, which may offer some support to GBP.
• US Economic Data: Traders are watching the release of US Retail Sales and the Empire State Manufacturing Index later on Monday for potential impact on market direction and USD strength.

Closing statement: GBP/USD could face further volatility, but the technical outlook suggests upside potential if economic data stabilizes and BoE remains cautious on rate cuts. A break above 1.3000 could trigger fresh buying interest.

• XAU/USD Price: Gold (XAU/USD) attracts dip-buyers on Monday, stabilizing below the $3,000 psychological mark touched on Friday. The precious metal’s resilience signals sustained investor interest amid market uncertainties.
• Geopolitical Tensions: Geopolitical tensions escalated over the weekend following US airstrikes on Yemen targeting Iran-backed Houthi militants, fueling safe-haven demand for gold.
• US-Russia Talks: US envoy Steve Witkoff indicated that President Trump may speak with President Putin this week following the Kremlin’s support for a 30-day ceasefire in Ukraine, adding mixed geopolitical signals to market sentiment.
• Chinese Stimulus: Gold prices found additional support from China’s latest measures aimed at boosting consumption and raising incomes. Positive Chinese activity data for January-February further strengthened bullish sentiment.
• Fed Policy Decision: Traders are likely to remain cautious ahead of the Federal Reserve’s policy announcement and updated economic projections on Wednesday, limiting aggressive positioning in the precious metal.

Closing statement: Gold remains well-supported by geopolitical risks and Chinese economic measures. However, the upcoming Fed decision could trigger fresh volatility, with a sustained break above $3,000 potentially driving further gains.

• Crude Oil Price: West Texas Intermediate (WTI) continues its winning streak for the second consecutive session, trading around $67.40 per barrel during European trading hours on Monday, supported by improved market sentiment.
• China's Economic Stimulus: On Sunday, Beijing introduced a special initiative aimed at reviving domestic consumption. The plan includes wage increases, household spending incentives, and efforts to stabilize stock and real estate markets, which improved the oil demand outlook.
• Geopolitical Tensions: The Houthis claimed responsibility for an attack involving 18 missiles and drones targeting the USS Harry S. Truman aircraft carrier in the Red Sea, heightening concerns about regional instability and potential oil supply disruptions.
• Russian Demands: Russia maintained its stance against any foreign troops in Ukraine post-conflict, insisting on Ukraine’s neutral status and NATO’s refusal to accept Ukraine, adding to geopolitical uncertainty.
• IEA's Outlook: The International Energy Agency (IEA) flagged risks to global oil demand stemming from ongoing trade and tariff uncertainty, projecting demand growth of just over 1 million barrels per day (b/d) in 2025.

Closing statement: WTI’s upward momentum may face resistance as geopolitical concerns and trade uncertainties counterbalance China's economic support measures. The market's focus now turns to upcoming US economic data and potential shifts in OPEC+ strategy.

• DAX Price: The DAX rallied 1.86% on Friday, March 14, reversing the previous day's 0.48% loss to close at 22,987. Progress on debt brake reforms and fiscal rules supported gains in banks, construction, and defense stocks.
• German Fiscal Deal: Germany’s historic fiscal agreement, securing a parliamentary vote for a €500 billion infrastructure fund and a €100 billion climate and economic transformation fund, boosted growth expectations amid global trade tensions.
• Wholesale Prices: Wholesale prices in Germany increased 1.6% year-on-year in February, up from 0.9% in January, indicating rising demand and inflationary pressures in the German economy.
• US Consumer Sentiment: The Michigan Consumer Sentiment Index dropped from 67.4 in February to 57.9 in March, marking a sharp decline that could weaken US consumer spending and weigh on global economic growth.
• US Retail Sales: Attention now turns to US retail sales data on Monday, March 17, with economists expecting a 0.7% MoM increase in February after a 0.9% decline in January.

Closing statement: The DAX's strong recovery is underpinned by Germany’s fiscal stimulus and improving domestic demand. However, softening US consumer sentiment and upcoming retail sales data could introduce near-term volatility.