01/10/2025
Written by: Ian Morley
Daily Currency Market Update – 23rd May 2025
GBP/EUR
Summary: GBP/EUR remains above 1.1880 following the release of stronger-than-expected UK Retail Sales data. The UK economy continues to show resilience, with retail spending rising by 1.2% month-on-month in April, far surpassing the forecast of 0.2%. Meanwhile, German Q1 GDP growth came in at 0.4%, beating expectations of 0.2%, but political uncertainty regarding US-EU trade relations is weighing on the Euro.
Outlook: The Pound could continue to find support if UK consumer confidence remains stable, while the Euro may struggle as President Trump’s pressure on the EU over tariffs creates further uncertainty.
GBP/USD
Summary: GBP/USD is trading near 1.3470, revisiting its three-year high as the Pound benefits from upbeat UK Retail Sales figures. The US Dollar remains under pressure amid growing concerns over the fiscal deficit, following President Trump’s proposed tax and spending bill. Meanwhile, mixed business activity readings from the UK add some caution to Sterling’s advance.
Outlook: UK Retail Sales strength suggests that the Bank of England may delay rate cuts, providing further support for GBP/USD. However, any fresh developments regarding US fiscal policy could influence broader market sentiment.
EUR/USD
Summary: EUR/USD dipped below 1.1300 on Thursday after encountering renewed selling pressure. The final German Q1 GDP growth rate confirmed a slight improvement, but ongoing concerns over ECB monetary policy have weighed on the Euro. Meanwhile, the US Dollar has partially trimmed its losses, though Moody’s recent downgrade of the US credit rating continues to be a headwind.
Outlook: Traders will monitor speeches from ECB officials today for insights into future rate policy. Any dovish rhetoric could keep the Euro on the backfoot.
USD/AUD
Summary: AUD/USD remains under pressure near 0.6400, struggling for direction after erratic price action earlier in the week. The Australian Dollar weakened following dovish comments from RBA Governor Michele Bullock, who suggested further rate cuts might be necessary. Meanwhile, the US Dollar has lost ground due to fiscal deficit concerns, lending some temporary support to the Aussie.
Outlook: Upcoming Australian CPI figures and developments in US-China trade talks will be key drivers for AUD/USD sentiment.
USD/CAD
Summary: USD/CAD trades near 1.3825, reversing gains as the US Dollar weakens. The Loonie has found support from higher crude oil prices, despite concerns over OPEC+ production adjustments. Additionally, reduced bets for a Bank of Canada rate cut in June have bolstered CAD sentiment.
Outlook: Oil prices and upcoming Canadian economic data will be crucial for USD/CAD movement. Any signs of deteriorating risk sentiment could support safe-haven demand for the US Dollar.
USD/CHF
Summary: USD/CHF has dropped to 0.8250 as the US Dollar struggles with fiscal debt concerns. The Swiss Franc has gained from safe-haven flows as investors react to geopolitical uncertainty and US fiscal policy risks. Meanwhile, expectations of further Swiss National Bank rate cuts remain a limiting factor for CHF strength.
Outlook: The pair’s trajectory will depend on US Treasury yields and central bank policy signals. If the SNB signals additional easing, USD/CHF could stabilise.
Final Summary
Sterling remains buoyant following stronger UK Retail Sales data, which reinforces expectations that the Bank of England may delay rate cuts. The US Dollar struggles amid ongoing fiscal deficit concerns and political uncertainty, providing support to the Euro, Australian Dollar, and Canadian Dollar. Meanwhile, safe-haven demand for the Swiss Franc has strengthened, though expectations for SNB rate cuts remain in focus. Looking ahead, traders will watch central bank speeches and global trade developments for further direction.