02/10/2025
Written by: Ian Morley
Daily Currency Market Update – 2nd May 2025
GBP/EUR
Summary: GBP/EUR remains stable around 1.1720, supported by growing optimism over a potential UK-US trade agreement. While Pound Sterling found support from this development, market sentiment remains cautious due to disappointing UK economic data and ongoing concerns about the Bank of England’s policy outlook. Meanwhile, expectations for further European Central Bank rate cuts continue to weigh on the Euro.
Outlook: The pair is likely to remain range bound as traders assess the probability of ECB and BoE rate cuts. Any fresh developments regarding UK trade negotiations with the US could provide further direction in the short term.
GBP/USD
Summary: GBP/USD rebounded to 1.3320 as risk sentiment improved ahead of the US Nonfarm Payrolls report. The Pound recovered after a three-day correction, as investors anticipate easing trade tensions between the US and China. Despite this, markets continue to price in a BoE rate cut at the upcoming policy meeting.
Outlook: The US jobs data will be a key driver for GBP/USD today. A weaker-than-expected NFP print could weigh on the Dollar, supporting Sterling gains. However, dovish BoE expectations may limit significant upside.
EUR/USD
Summary: EUR/USD regained ground above 1.1300 following hotter-than-expected Eurozone inflation figures. Preliminary HICP data showed inflation rising more than anticipated, though expectations for ECB rate cuts remain intact. The US Dollar, meanwhile, softened as markets cautiously await April’s Nonfarm Payrolls release.
Outlook: The key focus for EUR/USD will be the US jobs data. Any surprises could drive short-term volatility, while lingering concerns about Eurozone economic slowdown may keep a lid on significant gains for the Euro.
USD/AUD
Summary: The Australian Dollar is holding firm despite weaker-than-expected Retail Sales data for March. However, falling metal prices and renewed fears of a global economic slowdown have limited AUD’s gains. Optimism over easing US-China trade tensions helped cushion the downside.
Outlook: The outcome of upcoming US labour market data will be critical for USD/AUD movement. If the US economy shows signs of slowing, the Greenback could weaken, offering AUD a chance to advance further.
USD/CAD
Summary: USD/CAD dipped below 1.3850 as the US Dollar corrected lower ahead of the Nonfarm Payrolls report. The Canadian Dollar struggled with weaker manufacturing data, as Canada’s PMI fell for the third consecutive month.
Outlook: The pair’s movement will likely hinge on the US employment figures. Additionally, oil price trends could impact CAD, particularly as OPEC+ discussions on production adjustments continue.
USD/CHF
Summary: USD/CHF trades flat near 0.8290, with investors largely sidelined ahead of the critical US jobs data. Optimism surrounding easing global trade tensions has tempered safe-haven demand for the Swiss Franc, though uncertainty remains.
Outlook: If the US jobs report signals economic slowdown, USD/CHF could see further pressure as safe-haven flows return. Conversely, stronger-than-expected data may provide support for the US Dollar.
Final Summary
Market sentiment remains cautious ahead of the US Nonfarm Payrolls report, which is expected to shed light on the impact of tariffs on employment trends. The US Dollar has softened after recent gains, with investors reassessing expectations for Federal Reserve rate cuts. Meanwhile, Eurozone inflation surprised to the upside, but concerns over the region’s economic outlook persist. Optimism over potential US trade agreements has helped risk sentiment improve slightly, benefiting Sterling and the Australian Dollar. Traders will be closely watching upcoming data releases for fresh direction.