02/10/2025
Written by: Ian Morley
Daily Currency Market Update – 8th May 2025
GBP/EUR
Summary: GBP/EUR remains steady near 1.1760 as traders await the Bank of England’s rate decision later today. While the broader trend supports Sterling, technical indicators suggest a mixed short-term outlook. Eurozone data remains supportive, but political uncertainty in Germany continues to weigh on the currency.
Outlook: The BoE’s rate decision and Governor Bailey’s comments will dictate near-term direction. If the BoE signals further rate cuts ahead, Sterling could face downside pressure.
GBP/USD
Summary: GBP/USD is trading below 1.3300 after erasing most of its weekly gains on Wednesday. The Fed’s cautious stance and growing US-UK trade agreement speculation have influenced price action, with traders eyeing upcoming US data releases for fresh momentum.
Outlook: If President Trump confirms a trade deal with the UK, Sterling could see renewed strength. However, a BoE rate cut may temper gains in the short term.
EUR/USD
Summary: EUR/USD remains under pressure, slipping below 1.1300 despite better-than-expected German Industrial Production data. The Fed’s policy stance and lingering US trade concerns have kept the Dollar supported, adding to downside risks for the Euro.
Outlook: Near-term direction will hinge on US economic data and Fed rate expectations. A shift in sentiment around inflation or rate cuts could create volatility.
USD/AUD
Summary: AUD/USD is holding above 0.6440 after retreating from five-month highs near 0.6514. The Fed’s cautious stance on trade and tariffs weighed on the Aussie, though optimism over potential US-China trade discussions continues to provide support.
Outlook: Trade negotiations between US and China will be crucial for AUD/USD. If sentiment improves, the Aussie could regain lost ground.
USD/CAD
Summary: USD/CAD is trading with a mild negative bias above 1.3800, as crude oil prices rebound and weigh on the pair. The Fed’s latest policy stance has created uncertainty, limiting meaningful upside for the US Dollar.
Outlook: Canadian jobs data on Friday and oil price developments will influence USD/CAD movements. US trade policy remains a key risk factor.
USD/CHF
Summary: USD/CHF is consolidating above 0.8200, holding within a tight range as markets await fresh catalysts. Soft Swiss inflation data has reinforced expectations for a Swiss National Bank rate cut, helping the pair recover slightly.
Outlook: If the SNB signals further rate cuts, the Franc could remain under pressure. Meanwhile, Fed policy expectations will continue to drive USD/CHF sentiment.
Final Summary
Currency markets are in a cautious stance ahead of major central bank decisions, particularly the Bank of England’s rate announcement today. The US Dollar has rebounded following the Fed’s latest policy stance, while Sterling faces headwinds amid expectations of a BoE rate cut. Meanwhile, optimism surrounding a potential US-UK trade agreement is influencing sentiment. Commodity-linked currencies like the Australian and Canadian Dollars remain reactive to trade developments, with oil prices playing a crucial role in CAD’s movement. Markets will focus on upcoming economic data releases and policy signals for further direction.