02/10/2025
Written by: Ian Morley
Daily Currency Market Update – 9th May 2025
GBP/EUR
Summary: GBP/EUR is holding steady at 1.1780 as markets digest the Bank of England’s rate cut and continued expectations for ECB easing. The Pound gained moderate support from the recently announced US-UK trade deal, although the agreement retains a 10% tariff on British goods. Meanwhile, political uncertainty in Germany and the European Commission’s proposed countermeasures against US tariffs weigh on the Euro.
Outlook: ECB rate cut expectations may keep the Euro under pressure, though additional policy signals from European officials could offer some stability. Sterling’s outlook depends on trade developments, with potential volatility around US-EU negotiations.
GBP/USD
Summary: GBP/USD is hovering around 1.3250 after Thursday’s market correction. The Pound weakened as the Bank of England cut rates by 25 bps to 4.25%, while the Federal Reserve maintained its current policy stance. The US Dollar saw a sharp rise following the announcement of the US-UK trade deal, although its material impact remains limited.
Outlook: Investors are focused on upcoming US-China trade discussions over the weekend, which could impact risk sentiment. Sterling may remain range-bound, awaiting further developments in trade talks and US data releases.
EUR/USD
Summary: EUR/USD rebounded above 1.1200 after touching a one-month low earlier in the session. The Euro remains under pressure as markets increasingly price in further ECB rate cuts, potentially in June. Meanwhile, US data, including jobless claims, showed a resilient labour market, supporting the Greenback.
Outlook: US trade talks and Federal Reserve comments will be key for EUR/USD direction. Continued speculation over ECB policy easing could weigh on the Euro, while any shift in US economic outlook could drive volatility.
USD/AUD
Summary: AUD/USD is trading above 0.6400 following mixed Chinese trade data. While China’s trade surplus narrowed in April, export growth was stronger than expected. However, stalled US-China trade negotiations ahead of this weekend’s discussions have kept market sentiment cautious.
Outlook: The US-China trade talks will be critical for AUD/USD. A positive outcome could lift risk sentiment and support the Aussie, while continued tensions may pressure the pair lower.
USD/CAD
Summary: USD/CAD has climbed to a multi-week high near 1.3940 as US Dollar strength persists. The Federal Reserve’s hawkish pause and easing fears of a US recession continue to support the Greenback. Meanwhile, subdued oil prices have done little to support the Canadian Dollar, though markets await Canada’s employment data release later today.
Outlook: Canadian jobs data will be a key driver for USD/CAD. Oil price movements and US trade developments could also play a role in near-term direction.
USD/CHF
Summary: USD/CHF is hovering near 0.8310, pressured by lower US Treasury yields. Safe haven flows into the Swiss Franc remain modest, while Swiss National Bank signals of further rate cuts have kept CHF gains in check.
Outlook: The market focus remains on US-China trade negotiations and potential Fed rate adjustments. Any hawkish signals from the Fed could support USD/CHF, while safe-haven flows may increase if trade tensions persist.
Final Summary
Currency markets remain cautious ahead of critical trade discussions between the US and China over the weekend. The US Dollar has found strength from recent trade developments, while the Euro remains pressured by ECB rate cut expectations. The Pound Sterling is stable following the BoE’s rate decision, but broader trade concerns continue to influence sentiment. Commodity-linked currencies, such as the Australian and Canadian Dollars, are reacting to trade tensions and upcoming economic data releases. Looking ahead, traders will focus on central bank commentary and trade negotiations for fresh market direction.