German economic data and the pound sterling bucked the trend and rebounded

I. Market Focus

• Today's market focus revolved around escalating geopolitical tensions in the Middle East, the divergence in monetary policy between the US and UK central banks, and unexpectedly strong European macroeconomic data.

• The strongest performing core assets were the German DAX index and the pound sterling. The former benefited from economic recovery and a rebound in the semiconductor sector, while the latter was driven by a hawkish decision from the Bank of England (BoE), which propelled it sharply from its lows.

• In terms of secondary assets, oil prices rose due to the US airstrikes on Iran, bringing potential inflationary pressures. The market is closely awaiting further developments in energy supply and signals from Federal Reserve (Fed) officials.

• In short, today's main theme in the financial markets was: "A central bank policy game intertwined with inflation expectation reassessment and geopolitical risks."

II. German DAX Index (GER40) Observation

• Currently, this asset is in a strong breakout phase, with the spot price stabilizing at a three-week high of 25,612 points, and futures further advancing to around 25,740 points.

• The underlying fundamental support mainly came from Germany's first-quarter GDP expansion of 0.2% and July inflation rebounding to 2.8%, both beating market expectations; coupled with Infineon's nearly 10% surge driving a recovery in the semiconductor sector. However, poor earnings reports and forecasts from companies like Adidas and Airbus acted as a suppressive factor for the overall index surge.

• Regarding future developments, if the European Central Bank (ECB) releases a hawkish signal due to rising inflation, it may put pressure on the index's high valuations; if the semiconductor momentum continues and profit expectations are revised upwards, it could potentially drive the market further higher.

III. GBP/USD Observation

• The core drivers for this asset have shifted to the Bank of England's (BoE) hawkish forward guidance and the Middle East geopolitical situation. Although the BoE kept interest rates unchanged at 3.75%, the 6-3 vote was far more hawkish than expected. Market concerns stem from the risk that the US airstrike on Iran could trigger a surge in oil prices, potentially directly pushing up UK inflation expectations in late 2026. Simultaneously, the Fed's decision to maintain interest rates while internal voices advocating for rate hikes are also suppressing overall risk appetite.

• Close attention should be paid to UK real inflation and wage data, the status of Middle Eastern oil shipping through the Straits of Hormuz, and the impact of these inflation expectations on real yields.

IV. Technical Analysis

• German DAX Index (GER40): Currently, bullish sentiment is strong, with the short-term support level at the previous breakout point of 25,600. If it tests this level, attention should be paid to selling pressure at psychologically important psychological levels.

o Resistance: 25,850 / 26,000 / 26,200

o Support: 25,600 / 25,400 / 25,150

• GBP/USD: Following the decision, bullish sentiment surged, with the pair rising strongly from a low of 1.33 to around 1.347. If the price can hold above 1.3500, the upward trend will extend; if it falls below 1.3400, it may return to a weak, range-bound pattern.

* Resistance levels: 1.3500 / 1.3580 / 1.3650

* Support levels: 1.3400 / 1.3350 / 1.3300

Disclaimer: This content is for market information purposes only and does not constitute any investment advice. The market is risky; invest with caution.