02/10/2025
Written by: Ian Morley
Daily Currency Update – 29th April 2025
GBPEUR
Summary:
The pound made early gains against the euro on Tuesday, climbing as high as 1.1780, supported by stronger-than-expected UK retail sales data and dovish remarks from European Central Bank officials. ECB policymaker Olli Rehn suggested rates could be cut below neutral, reinforcing expectations of further easing. However, the pair later retraced back toward 1.1750 as investors remained cautious ahead of Bank of England policymaker Dave Ramsden’s speech.
Outlook:
While the euro is under pressure from weak economic sentiment and rising rate-cut expectations, the pound’s gains may be limited if BoE officials strike a dovish tone. Key comments from Ramsden could determine whether GBP maintains momentum or retreats further from recent highs.
EURUSD
Summary:
The euro surged to 1.14 against the US dollar, lifted by a broad wave of dollar selling and continued market focus on the negative growth implications of US trade policy. Sentiment shifted sharply against the greenback after last week’s tariff announcements sparked fears of a global slowdown and retaliation from major economies.
Outlook:
While the euro currently holds the upper hand, upside could be tempered if EU retaliatory tariffs escalate tensions. Traders are closely watching incoming inflation data and policy commentary from both the ECB and Fed, although no Fed rate decision is expected until May.
GBPUSD
Summary:
Sterling climbed to 1.34 versus the dollar, benefitting from improved UK data and dollar weakness tied to tariff-related recession concerns. March’s UK retail sales data came in well above expectations, giving sterling a further boost.
Outlook:
The pound could consolidate around current levels unless BoE commentary leans unexpectedly dovish. For the dollar, sentiment hinges on geopolitical developments and global risk appetite in the absence of major US economic releases this week.
USDAUD
Summary:
The US dollar has regained ground against the Australian dollar, with the pair pushing higher after earlier losses. AUD is under pressure amid renewed risk aversion and concerns over how Australia could be affected by the growing US-China trade rift.
Outlook:
If risk sentiment remains fragile and Chinese growth expectations deteriorate, AUD may continue to weaken. However, a pullback in USD strength or stabilising market conditions could offer the Aussie some relief.
USDCAD
Summary:
The Canadian dollar lost ground against the USD as oil prices retreated and uncertainty mounted over the global economic outlook. Canada’s close ties to the US economy and trade exposure add to the Loonie’s vulnerability in times of elevated tension.
Outlook:
With no immediate domestic drivers, CAD’s direction will be heavily influenced by crude prices and broader risk appetite. Any hawkish commentary from BoC officials may provide support later in the week.
USDCHF
Summary:
The Swiss franc held firm against the US dollar as demand for safe-haven assets remained elevated. Market nerves over trade wars and potential retaliatory measures from Europe and China continued to weigh on USD sentiment.
Outlook:
Further CHF strength is possible if geopolitical uncertainty deepens. However, any shift in tone from the Fed or signs of stabilisation could cap further franc gains.
Final Summary:
Markets remain highly reactive to US trade policy developments, with dollar weakness prevailing amid growing fears of recession. The pound and euro have both benefitted, though GBP has struggled to hold highs against the euro. Risk-sensitive currencies like AUD and CAD remain vulnerable, while safe havens such as CHF continue to attract cautious investors.