01/10/2025
Written by: Ian Morley
Daily Currency Market Update – 3rd June 2025
GBP/EUR
Summary: GBP/EUR holds near 1.1835 as investors closely monitor trade negotiations between the US and the EU. Talks have intensified after President Trump threatened to double import duties on steel and aluminium to 50%, effective Wednesday. The European Central Bank remains widely expected to cut its policy rate at its June meeting, bringing its deposit rate to 2.00%, while expectations of a Bank of England pause support the Pound.
Outlook: The ECB President’s speech later today will be key for EUR direction, with dovish commentary potentially weighing on the shared currency further. Meanwhile, signs of progress in trade talks could stabilise the Euro’s losses.
GBP/USD
Summary: GBP/USD consolidates above 1.3500, retreating slightly from Monday’s peak at 1.3560. The US Dollar found some support as safe-haven flows eased amid reports that President Trump and Chinese President Xi Jinping plan to meet later this week, improving risk sentiment. Investors now look ahead to the BoE Monetary Policy Report Hearings, which could provide further clarity on Sterling’s outlook.
Outlook: The BoE’s comments today could influence GBP/USD movement, with any signals of a cautious approach to rate cuts lending additional support to Sterling. Meanwhile, upcoming US labour market data will shape broader Dollar sentiment.
EUR/USD
Summary: EUR/USD trims some gains but remains above 1.1400 as markets await the Eurozone CPI release. Inflation is expected to have cooled in May, reinforcing expectations for further ECB easing, while the US Dollar struggles to regain meaningful traction amid fiscal concerns.
Outlook: If inflation figures come in lower than expected, the Euro could see additional downside pressure. Meanwhile, the Fed’s comments and US data releases will be watched for Dollar strength signals.
USD/AUD
Summary: AUD/USD trades near 0.6450, under bearish pressure following the Reserve Bank of Australia’s cautious stance. The RBA signalled that it is not yet ready to move monetary policy toward an expansionary setting, while Assistant Governor Sarah Hunter warned that higher US tariffs could drag on global growth.
Outlook: The Australian Dollar’s trajectory will depend on trade developments and upcoming Chinese economic releases, as well as further Fed rate expectations.
USD/CAD
Summary: USD/CAD edges higher towards 1.3730 as the US Dollar stabilises following its recent decline. The pair’s movement is influenced by rising crude oil prices and Bank of Canada rate expectations, with traders watching upcoming US labour market figures for additional direction.
Outlook: Oil prices and sentiment surrounding trade policies will shape USD/CAD movement, while expectations for Fed rate cuts could limit significant Greenback upside.
USD/CHF
Summary: USD/CHF dropped below 0.8200, hitting a multi-week low at 0.8155 amid continued US Dollar weakness. Safe-haven flows into the Swiss Franc have increased as global trade uncertainty persists, while the “Sell America” trend remains dominant in currency markets.
Outlook: Traders will monitor Fed policymakers’ speeches today for signs of further rate reductions, which could reinforce Dollar softness. The Swiss Franc may remain supported unless broader risk sentiment improves.
Final Summary
Markets remain cautious ahead of key trade negotiations and upcoming central bank decisions. Pound Sterling finds support from expectations of a Bank of England pause, while the Euro awaits inflation data and ECB commentary. The US Dollar struggles with fiscal and trade uncertainties, while commodity-linked currencies like the Australian and Canadian Dollars react to economic indicators and oil price trends. Safe-haven demand for the Swiss Franc has increased as uncertainty remains high. Looking ahead, investors will closely watch policy signals and economic data releases for further market direction.