01/10/2025
Written by: Ian Morley
Daily Currency Market Update – 29th May 2025
GBP/EUR
Summary: GBP/EUR strengthens as weak German employment data increases expectations for an ECB rate cut in June. The Euro is under pressure following a rise in German unemployment, while the Pound Sterling finds support from strong UK inflation and retail sales figures. Bank of England officials continue to guide towards a cautious approach to rate reductions, reinforcing Sterling’s stability.
Outlook: Investors will closely monitor comments from ECB and BoE officials. If ECB policymakers reinforce the likelihood of easing measures, the Euro could face further downside, supporting GBP/EUR gains.
GBP/USD
Summary: GBP/USD trades near 1.3435 after dipping earlier in the Asian session. The US Dollar strengthened following a federal trade court’s decision to block President Trump’s reciprocal tariffs, improving sentiment around the US economy. Meanwhile, uncertainty surrounding the Federal Reserve’s rate policy remains, with officials highlighting the complexity of balancing inflation and employment growth.
Outlook: US GDP figures will be a key driver for GBP/USD today. If growth comes in weaker than expected, the Dollar may struggle, supporting Sterling’s recovery.
EUR/USD
Summary: EUR/USD slipped below 1.1250 as the US Dollar advanced amid easing trade concerns. The Federal Open Market Committee’s (FOMC) latest meeting minutes reflected cautious optimism, with policymakers acknowledging heightened uncertainty in the economic outlook. Meanwhile, European Central Bank officials hinted at potential easing, weighing on the Euro.
Outlook: We will be watching upcoming US data releases, particularly GDP growth estimates and employment figures. If the Dollar strengthens further, EUR/USD could see additional downside.
USD/AUD
Summary: AUD/USD holds near 0.6420 after recovering earlier losses. The Australian Dollar remains supported by improved risk sentiment following China’s upbeat industrial profits report. However, lingering concerns over future Reserve Bank of Australia rate cuts and trade tensions between the US and China weigh on the Aussie.
Outlook: US macroeconomic releases and developments in China’s trade policies will be key factors influencing AUD/USD movement.
USD/CAD
Summary: USD/CAD climbed above 1.3800 as the US Dollar remained firm. The Federal Reserve’s patient approach to rate adjustments continues to support the Greenback, while crude oil price fluctuations keep the Canadian Dollar in check. Investors are also looking ahead to Canada’s upcoming GDP report for additional guidance.
Outlook: Oil price trends and expectations for the Bank of Canada’s policy stance will shape USD/CAD direction. A stronger Canadian GDP reading could provide some relief for the Loonie.
USD/CHF
Summary: USD/CHF rallied toward 0.8350 after a US federal court blocked Trump’s proposed tariffs, improving market sentiment. The Greenback gained additional support from hawkish signals in the FOMC minutes, while safe-haven demand for the Swiss Franc remained subdued.
Outlook: Traders will focus on US macroeconomic data for further indications of Fed policy direction. Any signs of stronger economic growth could reinforce USD strength, keeping USD/CHF elevated.
Final Summary
Markets are reacting to shifting trade policies and expectations surrounding central bank rate decisions. The US Dollar strengthened after Trump’s tariffs were blocked, improving risk sentiment. The Euro remains pressured as weak German employment figures reinforce ECB rate-cut expectations, while Sterling holds firm following stronger inflation and retail sales data. Commodity-linked currencies, including the Australian and Canadian Dollars, are responding to trade developments and domestic economic indicators. We will be watching key US economic releases and central bank commentary for further direction.