25/04/2025
Written by: Ian Morley
Daily Currency Update – 6th March 2025
GBPEUR
Summary:
The Pound fell against the Euro on Wednesday, with GBPEUR falling below 1.1940. This marks the fourth consecutive day of gains for the Euro against the Pound. The move came as markets positioned ahead of today’s European Central Bank (ECB) policy decision, where a 25 basis point rate cut is widely expected. Recent comments from Bank of England officials, including Deputy Governor Dave Ramsden, suggest the BoE will take a cautious and gradual approach to policy changes amid ongoing labour market and global trade uncertainty.
Outlook:
Attention will be firmly on the ECB today, with markets already pricing in further rate cuts this year. If ECB President Christine Lagarde signals more easing ahead, the Euro could weaken, giving the Pound some room to recover. However, UK inflation persistence and steady wage growth could keep BoE policy restrictive for longer than anticipated, which may limit GBP downside in the medium term.
GBPUSD
Summary:
The Pound held relatively steady against the US Dollar, trading near 1.2890 after a strong start to the week. The US Dollar continues to struggle following weaker-than-expected US private payroll data, which highlighted a slowdown in hiring. At the same time, improved risk sentiment, driven by Trump temporarily exempting autos from Mexico and Canada from tariffs, added support to Sterling.
Outlook:
With markets now looking ahead to tomorrow’s US Nonfarm Payrolls report, GBP/USD could remain rangebound today. A weak NFP reading would further pressure the Dollar, allowing Sterling to push higher. However, expectations of a cautious BoE stance could cap any major upside for GBP in the near term.
EURUSD
Summary:
The Euro extended its rally against the US Dollar, reaching the 1.0800 level for the first time in four months. The Dollar weakened sharply as disappointing private sector payroll data stoked concerns about slowing US economic momentum. Optimism around Germany’s proposed infrastructure spending plan also supported the Euro ahead of today’s ECB meeting, where another 25bp rate cut is expected.
Outlook:
The ECB policy decision and President Lagarde’s comments will be critical for the Euro today. If the ECB signals fewer rate cuts than currently expected, the Euro could push higher. However, any signals of prolonged easing — especially in response to potential US tariffs on European exports — could limit further gains.
USDCAD
Summary:
The Canadian Dollar strengthened further, pushing USD/CAD below 1.4350. The Loonie found support after Trump’s decision to delay the imposition of auto tariffs on Canada and Mexico for one month. Stronger risk sentiment and some stabilisation in oil prices also provided a tailwind for CAD.
Outlook:
Markets will be watching Canadian Ivey PMI data today for further insight into the domestic economy. If Trump’s tariff exemptions hold, the Loonie could remain supported. However, any deterioration in broader US economic data, particularly Friday’s NFP report, could reignite demand for the safer US Dollar.
AUDUSD
Summary:
The Australian Dollar held its ground, consolidating recent gains around 0.6350. Better-than-expected Australian trade data and a positive shift in risk sentiment following Trump’s tariff relaxation have supported the Aussie. Building approvals also came in stronger than expected, pointing to some resilience in the Australian economy.
Outlook:
The improved sentiment could help AUD maintain its footing, particularly if risk appetite remains healthy. However, ongoing geopolitical tensions, particularly China’s warnings over Trump’s tariffs, could still weigh on the currency. The focus will soon shift to Friday’s US NFP report, which could either extend USD weakness or spark a correction.
USDCHF
Summary:
The US Dollar rebounded modestly against the Swiss Franc, with USD/CHF rising back above 0.8900. The safe-haven Franc softened slightly as global risk sentiment improved after Trump’s tariff exemptions on autos from Canada and Mexico. However, the Dollar remains under broader pressure from weaker US data and growing expectations of multiple Fed rate cuts later this year.
Outlook:
Further gains in USD/CHF may be limited unless upcoming US data surprises to the upside. Friday’s Nonfarm Payrolls will be key — if the data disappoints again, the Dollar could resume its downward path, pushing USD/CHF lower. On the Swiss side, geopolitical uncertainty, particularly related to US-China trade relations, could still support safe-haven demand for the Franc.
Final Summary
Today’s focus will be on the ECB’s policy decision and President Lagarde’s press conference, which could drive significant moves in EUR pairs. Meanwhile, the US Dollar remains under pressure as weak employment data has increased expectations of Fed rate cuts later this year. The Pound is holding firm but faces potential headwinds from cautious BoE commentary. All eyes will soon turn to Friday’s US Nonfarm Payrolls report, which could set the tone for broader market direction into next week.