Daily Analysis 29/06/2026

• GBP/USD Price: The GBP/USD pair is trading slightly lower around the 1.3200 level during Monday's European session after opening with a bullish gap.
• Political transition: Prime Minister Keir Starmer's decision to step down as Labour Party leader has increased political uncertainty, with Andy Burnham potentially set to become Prime Minister as early as July 17 if no challenger emerges.
• Burnham agenda: Andy Burnham is expected to present plans aimed at decentralizing economic decision-making across the UK. His proposals include promoting "good growth in every postcode," creating a "No. 10 North," and reforming public procurement to prioritize British businesses and jobs, measures that could influence market expectations for future government spending and regional investment.
• Middle East: Iran's Foreign Minister Abbas Araghchi reiterated that control of the Strait of Hormuz remains solely with Tehran and warned that attempts to bypass Iran's preferred shipping arrangements could lead to renewed tensions.
• US-Iran talks: US officials confirmed that technical negotiations with Iran will continue under the existing memorandum of understanding and that both sides have agreed to stand down for now, allowing vessels to move freely through the region.

Closing statement: GBP/USD remains range-bound as UK political uncertainty is balanced against improving geopolitical sentiment following continued US-Iran negotiations. The pair's near-term direction will likely depend on further developments surrounding the UK's leadership transition and whether diplomatic progress in the Middle East continues to support broader risk appetite.

• XAU/USD Price: Gold has recovered from its intraday lows but remains in negative territory, trading around the $4,060 level during Monday's European session. The metal continues to struggle as expectations of tighter US monetary policy and a resilient US Dollar outweigh modest buying interest.
• Fed's Barkin: Federal Reserve's Thomas Barkin stated that inflation remains too high, although he sees tentative signs that price pressures may begin to moderate.
• AI policy: The US government has authorized the redeployment of Anthropic's Mythos 5 AI model to selected US organizations, while the more advanced Fable 5 model remains restricted for public use.
• Rate expectations: According to the CME FedWatch Tool, markets are pricing in nearly a 59.7% probability of a Federal Reserve interest rate hike as early as September 2026.
• Upcoming data: Investors are looking ahead to an important week for US economic releases ahead of the July 5 holiday, with particular attention on Federal Reserve Chair Kevin Warsh's appearance at the ECB's Sintra Forum.

Closing statement: Gold remains on the defensive as investors continue to favor the US Dollar amid persistent expectations of further Federal Reserve tightening. While Fed officials acknowledge tentative signs of easing inflation, the near-term outlook for XAU/USD will largely depend on upcoming US economic data and any policy signals from Chair Kevin Warsh at the ECB's Sintra Forum.

• Crude Oil Price: Crude oil prices continue to trade around the $70 per barrel mark after falling sharply in response to the 60-day ceasefire agreement between the United States and Iran.
• Crude market: Bloomberg reports that the ceasefire has triggered substantial discounts on available crude cargoes, with Angolan crude trading at a $10 discount to dated Brent for the first time in a decade. At the same time, Chinese refiners have begun offering excess crude cargoes for sale, suggesting that supply currently exceeds near-term demand and adding further downward pressure on prices.
• Strait of Hormuz: Although tanker traffic through the Strait of Hormuz has rebounded, the Wall Street Journal notes that most outbound vessels were previously stranded during the conflict.
• Strategic inventories: Despite the recent sell-off, structural supply factors remain supportive over the medium term. The US Strategic Petroleum Reserve is at its lowest level in four decades, while China could eventually return as a significant buyer once it finishes selling current inventories, potentially providing future support for global crude demand.
• Saudi Arabia: Saudi Arabia is expected to reduce the official selling prices of its crude exports to Asia for August deliveries as regional benchmarks have weakened following the tentative reopening of the Strait of Hormuz and increased Middle Eastern supply.

Closing statement: WTI remains under strong bearish pressure as easing geopolitical tensions, discounted crude cargoes, and improving regional supply continue to weigh on prices. While low strategic inventories and the potential return of Chinese demand could provide medium-term support, the near-term outlook remains negative unless supply conditions tighten again or geopolitical risks re-emerge.

• DAX 40 Price: The DAX 40 is trading modestly higher around the 24,770-point mark during Monday's European session.
• Jefferies rating: Jefferies reduced its price target for Volkswagen from €130 to €120 following meetings with German and Swiss companies, while maintaining its "Buy" recommendation.
• Railway project: Germany has completed the review process for awarding a major railway contract to a consortium consisting of S-Bahn Berlin, Siemens Mobility, and Stadler Germany.
• 2027 budget: The German government has successfully finalized its draft budget for 2027 after closing an initial €21 billion funding gap. The agreement reached by Finance Minister Lars Klingbeil and the cabinet reduces fiscal uncertainty and demonstrates the government's commitment to maintaining budget stability while continuing to finance key public investment priorities.
• Sintra Forum: Attention now shifts to the ECB's annual policy forum in Sintra, Portugal, where central bankers will discuss the theme, "Shaping Europe's future: innovation, growth and stability."

Closing statement: The DAX begins the week on a firmer footing, supported by positive domestic developments including infrastructure investment and improved fiscal clarity. However, the index's near-term direction will likely be driven by messages from the ECB's Sintra Forum, as investors look for further guidance on the outlook for interest rates, inflation, and economic growth in the Eurozone.