01/10/2025
Written by: Ian Morley
Daily Currency Market Update – 4th June 2025
GBP/EUR
Summary: GBP/EUR is back near 1.1880 following weaker-than-expected Eurozone inflation data. The preliminary Core Harmonised Index of Consumer Prices (HICP) eased to 2.3% in May from 2.7% in April, missing expectations. This reinforces market speculation that the European Central Bank (ECB) is likely to cut rates in its policy meeting on Thursday. Meanwhile, the Bank of England (BoE) remains cautious, with recent UK inflation figures prompting expectations of a delay in its easing cycle.
Outlook: The ECB decision tomorrow will be pivotal for GBP/EUR movement. If the central bank announces a rate cut as expected, the Euro could face additional selling pressure, supporting Sterling gains.
GBP/USD
Summary: GBP/USD continues to trade above 1.3500 after minor losses in the previous session. The Pound remains supported amid speculation that the BoE may delay rate cuts due to persistent inflation, while the US Dollar struggles under the “Sell America” trend, driven by fiscal uncertainty. We await the upcoming US Nonfarm Payrolls report for further insight into the state of the US labour market.
Outlook: BoE Governor Andrew Bailey’s comments and further US trade developments could shape GBP/USD movement. If the US employment figures show weakness, the Dollar may come under renewed selling pressure.
EUR/USD
Summary: EUR/USD consolidates below 1.1400 as softer Eurozone inflation data supports ECB rate-cut expectations. Meanwhile, stronger-than-expected US JOLTS Job Openings data reinforced the Dollar’s position, trimming some of the Euro’s recent gains.
Outlook: Focus is on Eurozone Services PMI and ECB commentary today. A dovish tone from policymakers could weigh on the Euro ahead of the rate decision.
USD/AUD
Summary: AUD/USD remains pressured below 0.6500 as mixed Australian economic data limits upside momentum. The Ai Group Manufacturing PMI remains deeply negative, reflecting ongoing concerns in the sector, while GDP growth in Q1 came in below expectations. The US Dollar stabilised ahead of key economic releases, adding further resistance for the Aussie.
Outlook: The Australian Dollar’s movement will depend on US economic trends and potential Reserve Bank of Australia policy shifts in the coming months.
USD/CAD
Summary: USD/CAD trades near 1.3715 ahead of today’s Bank of Canada (BoC) rate decision. The Canadian Dollar has remained supported by relatively strong economic indicators, while crude oil prices continue to influence short-term fluctuations in the pair.
Outlook: If the BoC signals a hawkish stance, USD/CAD may decline. Meanwhile, US ISM Services PMI figures could provide additional direction.
USD/CHF
Summary: USD/CHF holds steady near 0.8250 following President Trump’s implementation of increased tariffs on steel and aluminium. The Swiss Franc remains firm as traders anticipate a potential Swiss National Bank rate cut, while safe-haven flows persist amid global trade tensions.
Outlook: The trajectory of USD/CHF will depend on US economic indicators and SNB rate expectations. If risk sentiment deteriorates further, safe-haven demand may keep the Franc supported.
Final Summary
Currency markets remain focused on central bank rate policies and upcoming economic data releases. Pound Sterling is holding firm ahead of the Bank of England’s next policy moves, while the Euro remains under pressure as ECB rate-cut expectations grow. The US Dollar struggles under fiscal uncertainty but found temporary support from strong job openings data. Commodity-linked currencies, including the Australian and Canadian Dollars, are responding to economic trends and crude oil price movements.