01/10/2025
Written by: Ian Morley
Daily Currency Market Update – 2nd June 2025
GBP/EUR
Summary: GBP/EUR remains in the mid-1.18s as the Euro struggles with uncertainty ahead of the European Central Bank’s upcoming rate decision. The pair touched an 8-week high near 1.1970 last week but retreated as traders adjusted Euro positions.
Outlook: The ECB’s rate decision later this week will be key for GBP/EUR direction. If policymakers signal further easing beyond June, the Euro may face additional pressure. Meanwhile, Sterling sentiment is shaped by broader trade discussions with the US and ongoing concerns over fiscal risks.
GBP/USD
Summary: GBP/USD has surged beyond 1.3500 as the US Dollar weakens, pressured by growing trade tensions and concerns over fiscal stability. President Trump’s proposal to increase import tariffs on aluminium and steel to 50% has heightened fears of inflationary pressures, while accusations of a trade agreement violation by China have further deteriorated sentiment.
Outlook: Sterling remains supported by Dollar weakness, but traders will monitor BoE policymaker Mann’s speech today for insights on UK monetary policy. The ISM Manufacturing PMI from the US later in the session could also impact the pair.
EUR/USD
Summary: EUR/USD is hovering near 1.1400, gaining traction amid the US Dollar’s decline. The US Personal Consumption Expenditures (PCE) Price Index showed a decline in inflation, reinforcing expectations for Federal Reserve easing. Meanwhile, the Euro awaits revisions to Germany’s and the Eurozone’s HCOB Manufacturing PMI.
Outlook: Analysts will be looking for ECB rate-cut guidance and US PMI results for fresh momentum. Any signs of slowing US economic growth could further pressure the Dollar, supporting EUR/USD gains.
USD/AUD
Summary: AUD/USD rose over 0.50% on Monday as the Australian Dollar capitalised on US Dollar weakness. However, Australian labour market concerns persist, with ANZ Job Advertisements dropping by 1.2% in May, reflecting continued softness.
Outlook: The Reserve Bank of Australia’s outlook remains cautious, with further rate cuts on the table. The Aussie may react to shifts in US-China trade relations and upcoming Chinese economic indicators.
USD/CAD
Summary: USD/CAD edged lower towards 1.3700 as traders anticipate the Bank of Canada will maintain its current rate stance in June. Canada’s economy outperformed forecasts in Q1, growing at an annualised 2.2%, while higher crude oil prices continue to support the Canadian Dollar.
Outlook: The BoC rate decision on Wednesday and further oil market developments will be key drivers for USD/CAD movement.
USD/CHF
Summary: USD/CHF has dropped below 0.8200 as safe-haven demand for the Swiss Franc increases. Switzerland’s Q2 GDP growth surprised to the upside, expanding at 2% versus a forecasted 1.5%. Meanwhile, speculation over a Swiss National Bank rate cut to zero in June adds uncertainty to CHF’s trajectory.
Outlook: The SNB rate decision and upcoming US economic data will be key factors influencing USD/CHF. If Fed policymakers signal further rate reductions, the Dollar may continue to weaken, supporting CHF gains.
Final Summary
The US Dollar weakens as trade tensions and fiscal concerns mount, with investors cautious ahead of key economic data releases. Sterling remains buoyant, supported by resilience in UK retail and inflation figures, while the Euro faces ECB rate-cut speculation. Commodity-linked currencies, including the Australian and Canadian Dollars, react to economic indicators and trade developments. Safe-haven demand for the Swiss Franc has strengthened, while traders await upcoming central bank decisions for further market direction.