02/10/2025
Written by: Ian Morley
Daily Currency Market Update – 6th May 2025
GBP/EUR
Summary: GBP/EUR remains steady above 1.1740, despite stronger Eurozone economic data. Investors are closely watching PMI figures from both the UK and Eurozone, which may set the tone for the pair’s movement. Meanwhile, market expectations for a European Central Bank rate cut in June remain unchanged despite elevated inflation readings.
Outlook: If Eurozone PMI data comes in better than expected, the Euro may gain further ground, putting pressure on GBP/EUR. However, Sterling could find additional support if UK economic data surprises to the upside or if new trade developments emerge.
GBP/USD
Summary: GBP/USD extends gains above 1.3320 after snapping a four-day losing streak on Monday. The pair is benefiting from improved risk sentiment as investors prepare for central bank meetings later in the week. Markets expect the Federal Reserve to hold rates steady, while the Bank of England is widely anticipated to cut rates on Thursday.
Outlook: The Fed’s decision and Chair Powell’s post-meeting comments will be critical for GBP/USD direction. Any dovish signals from the BoE could weigh on Sterling, while a cautious Fed stance could provide support for the Dollar.
EUR/USD
Summary: EUR/USD is grinding sideways below 1.1350, constrained by uncertain sentiment ahead of the Federal Reserve’s policy announcement. Traders are largely sidelined, awaiting cues on US rate policy. The Euro remains supported by last Friday’s stronger-than-expected inflation data.
Outlook: The Fed’s rate decision and accompanying statement will dictate near-term direction for EUR/USD. If the Fed signals a more dovish stance, the US Dollar could weaken, offering upside potential for the Euro.
USD/AUD
Summary: AUD/USD consolidates around 0.6450 after retreating from five-month highs near 0.6500. The Australian Dollar saw mild pressure following weaker Chinese PMI figures, but optimism over potential trade agreements involving the US is providing some underlying support.
Outlook: The trajectory of AUD/USD will depend on developments in US-China trade relations and the Fed’s rate decision. A hawkish Fed stance could weigh on the Aussie, while dovish signals may offer some relief.
USD/CAD
Summary: USD/CAD holds near 1.3830 as recovering crude oil prices help limit the pair’s gains. The US Dollar saw mild support from better-than-expected ISM Services PMI data, but overall sentiment remains cautious ahead of the Fed’s policy announcement.
Outlook: The US-Canada trade discussions could be a significant market driver. If trade negotiations progress positively, the Canadian Dollar could strengthen, weighing on USD/CAD. The Fed’s rate stance will also play a crucial role.
USD/CHF
Summary: USD/CHF remains above 0.8200 but struggles for upside momentum amid subdued demand for the US Dollar. Safe haven flows into the Swiss Franc continue as investors exercise caution ahead of the Federal Reserve’s rate call.
Outlook: The Fed’s policy decision and Chair Powell’s remarks will be key for USD/CHF. If the Fed signals rate cuts sooner than expected, the US Dollar could weaken further, supporting the Franc.
Final Summary
Currency markets remain range bound as traders await the Federal Reserve’s policy decision, which is expected to shape sentiment in the near term. The US Dollar has seen mild support from recent economic data, but uncertainty around US trade policies and Fed rate expectations has kept price action subdued. Meanwhile, the Euro holds firm ahead of PMI releases, and Sterling continues to find support as markets anticipate the Bank of England’s upcoming rate decision. Commodity currencies like the Australian and Canadian Dollars are reacting to trade developments and shifting risk sentiment, with crude oil prices playing a role in CAD’s movement. Looking ahead, market participants will focus on central bank meetings for fresh guidance.