Daily Analysis 21/03/2025

• GBP/USD Price: GBP/USD remains under pressure below 1.2950 in Friday’s early European session. Thursday’s price action formed a bearish engulfing candle pattern, signaling that buyers are stepping back while sellers push the pair lower.
• BoE Rates: The Bank of England (BoE) held rates steady and warned about potential rate cuts, citing "a lot of economic uncertainty" according to Governor Andrew Bailey.
• Policy Outlook: The BoE maintained that a “gradual and careful” approach to policy restraint remains appropriate, highlighting that domestic wage pressures are still elevated but showing signs of moderation.
• Fed Outlook: Fed Chair Jerome Powell acknowledged increased downside risks tied to Trump's tariff threats, but maintained that US economic data remains broadly healthy despite softening from recent peaks.
• Muted Calendar: With a quiet economic docket on Friday, traders are left to digest the week’s developments. Market sensitivity to Trump’s social media activity could drive volatility heading into the weekend.

Closing statement: GBP/USD remains vulnerable to further downside amid a bearish technical setup and cautious central bank outlooks. Political and trade developments could steer near-term direction.

• XAU/USD Price: Gold price faces selling pressure as a modest rebound in the US Dollar prompts profit-taking. The retreat comes after gold reached fresh highs earlier in the week.
• US-China Trade Talks: US Senator Steve Daines will visit China for trade negotiations — the first high-level meeting since President Trump's return. Talks aim to ease rising tariff tensions and revive stalled agreements.
• Russia-Ukraine Conflict: Both Russia and Ukraine intensified aerial attacks on Thursday despite ongoing truce talks. Ukraine targeted Russia's Engels airbase with drones, causing explosions and a fire in the Saratov region.
• US Home Sales: Existing US Home Sales rose to 4.26 million units in February, surpassing the revised 4.09 million in January, reflecting increased housing market activity.
• Jobless Claims: US weekly Initial Jobless Claims came in at 223K, slightly higher than the previous week’s 220K but still below market expectations, signaling resilience in the labor market.

Closing statement: Gold is under mild pressure from USD strength and improving US economic data. However, geopolitical tensions and trade uncertainty could support safe-haven demand in the near term.

• WTI Oil Price: West Texas Intermediate (WTI) trades around $68.20 per barrel during Friday’s European session, holding its ground despite geopolitical and supply-side developments.
• New US Sanctions: The US Treasury imposed fresh Iran-related sanctions on Thursday, targeting an independent Chinese refiner and several entities involved in supplying Iranian crude oil to China.
• OPEC+ Cuts: OPEC+ has introduced a plan for seven member nations to cut production by 189,000–435,000 bpd each month until June 2026, aiming to stabilize global oil prices.
• Russia-Ukraine Tensions: Russia launched 171 drones over Ukraine on Thursday. Meanwhile, Russian and US officials are scheduled to meet in Saudi Arabia on Monday to discuss the ongoing conflict.
• Middle East Conflict: Israel resumed heavy strikes on Gaza on Tuesday, ending the ceasefire with Hamas that had held since January. On Thursday, Hamas responded by firing three rockets at Israel, causing no casualties.

Closing statement: Oil prices remain supported by OPEC+ supply cuts and geopolitical instability, but US sanctions on Iranian oil and Middle East tensions could introduce additional volatility.

• DAX Price: The DAX fell by 1.24% on Thursday, closing at 22,999, extending Wednesday’s 0.40% loss as investors reacted to the European Central Bank’s (ECB) stance on potential US tariffs and their impact on the Eurozone economy.
• ECB News: ECB President Christine Lagarde cautioned that proposed 25% US tariffs on EU goods could reduce Eurozone GDP growth by 0.3 percentage points and by 0.5 percentage points if the trade conflict escalates.
• Auto Sector: Auto stocks suffered significant losses, with Volkswagen down 4.15%, BMW losing 3.53%, and Porsche falling 3.40%. Daimler Truck Holding and Mercedes-Benz Group also posted notable declines.
• Fiscal Reform: Germany’s upper house of Parliament is set to vote on the fiscal reform bill on Friday, March 21. While passage is expected, investors are focusing on the bill's implementation and potential to boost growth.
• US Economic Data: The Philly Fed Manufacturing Index fell from 18.1 in February to 12.5 in March, while US initial jobless claims increased from 221K to 233K for the week ending March 15, signaling potential economic slowing.

Closing statement: DAX remains pressured by tariff concerns and weak US data, while the outcome of Germany’s fiscal reform vote could shape market sentiment in the near term.