01/10/2025
Written by: Ian Morley
Daily Currency Market Update – 5th June 2025
GBP/EUR
Summary: GBP/EUR edges higher to 1.1880 ahead of today’s European Central Bank (ECB) rate decision. The Euro faces moderate selling pressure as investors anticipate the ECB will cut its key borrowing rate by 25 basis points, marking its eighth reduction since June 2024. Meanwhile, the Pound remains steady amid expectations that the Bank of England will refrain from rate cuts at its next policy meeting.
Outlook: Markets will closely watch ECB President Christine Lagarde’s press conference later today for clues on whether further rate cuts are planned for the second half of the year. If Lagarde signals an extended easing cycle, the Euro could face additional downside pressure.
GBP/USD
Summary: GBP/USD fluctuates around 1.3550 as the US Dollar stages a modest recovery. The Greenback regained ground amid a technical correction, following Wednesday’s sharp losses triggered by weak US employment and business activity data. However, concerns over fiscal instability and rising tariff uncertainty continue to weigh on broader sentiment.
Outlook: US Initial Jobless Claims and Goods Trade Balance figures later today will be key for GBP/USD movement. If the data disappoints, the Dollar may struggle, supporting Sterling gains.
EUR/USD
Summary: EUR/USD holds steady above 1.1400 as traders await the ECB’s monetary policy announcement. The Euro remains supported by better-than-expected German Factory Orders, which rose 0.6% in April against expectations of a decline. However, ECB rate cut expectations continue to limit upside potential for the pair.
Outlook: The ECB’s policy statement and updated economic projections will determine near-term direction. If Lagarde takes a dovish stance, EUR/USD could face renewed selling pressure.
USD/AUD
Summary: AUD/USD trades around 0.6500, benefiting from improved risk sentiment and stronger Chinese economic data. China’s Caixin Services PMI climbed to 51.1 in May, reinforcing optimism about demand stability. Meanwhile, the Australian Dollar steadied despite a weaker-than-expected domestic trade surplus.
Outlook: US labour market data and developments in US-China trade talks could influence AUD/USD movements in the short term.
USD/CAD
Summary: USD/CAD lingers near 1.3670 as the Canadian Dollar remains firm following the Bank of Canada’s decision to keep interest rates unchanged. Reports suggest a trade deal between the US and Canada could be finalised before the G7 Summit on June 15, lending additional support to the Loonie.
Outlook: Crude oil price dynamics and US employment data could shape USD/CAD direction today. If markets continue pricing in Fed rate cuts, the Canadian Dollar may strengthen further.
USD/CHF
Summary: USD/CHF hovers near 0.8200 as traders brace for heightened volatility around US Nonfarm Payrolls data. The US Dollar remains under pressure following weaker-than-expected ADP employment figures, while Swiss inflation concerns add uncertainty to the Franc’s outlook.
Outlook: If US economic releases continue to show weakness, the Dollar could struggle, pushing USD/CHF lower. The Swiss National Bank’s upcoming rate decision will also be key for determining CHF strength.
Final Summary
Currency markets are poised for volatility as traders await the ECB’s rate decision and key US economic data. The Pound remains supported amid speculation that the Bank of England will delay rate cuts, while the Euro faces pressure ahead of the ECB’s announcement. The US Dollar struggles with economic uncertainty, while commodity-linked currencies, including the Australian and Canadian Dollars, react to trade developments and domestic economic indicators. Traders will closely watch central bank commentary and policy signals for fresh market direction.