20/01/2025
Written by: Ian Morley
GBPEUR
Summary:
GBP benefitted from improved risk sentiment yesterday, gaining ground against the EUR. However, higher-than-expected German CPI numbers provided some interim support for the EUR ahead of today’s EU CPI data release.
Outlook:
Focus will be on the EU CPI numbers today. A higher-than-expected reading could bolster the EUR, offering temporary support against the GBP. However, uncertainty surrounding potential US tariffs on the Eurozone may limit the EUR’s strength in the medium term.
GBPUSD
Summary:
GBP continued its upward momentum, breaking above 1.2500, supported by the broader weakening of the USD. Positive UK retail sales data for December further reinforced the Pound’s gains.
Outlook:
Later today, the US ISM Services PMI and JOLTS data will be key drivers for this pair. While GBP may maintain its recent strength in the short term, any robust US data could provide the USD with a platform for recovery.
EURUSD
Summary:
EUR/USD climbed on Monday amid USD weakness driven by improved market risk sentiment. The pair stabilised near 1.0400, with markets awaiting today’s Eurozone inflation data.
Outlook:
If Eurozone CPI data meets or exceeds expectations, the EUR could see a short-term boost against the USD. However, fears of US tariffs on the Eurozone and stronger US data could reverse gains over the medium term.
USDCAD
Summary:
USD/CAD pair depreciated following Canadian PM Justin Trudeau’s announcement of his resignation. Political uncertainty in Canada initially supported the CAD, but lower crude oil prices capped its gains.
Outlook:
Traders will focus on Canada’s Ivey PMI data later today. While political developments and potential retaliatory tariffs by Canada may keep the CAD supported, falling oil prices and strong US economic data could limit the CAD’s strength.
AUDUSD
Summary:
AUD gained for the fourth consecutive day as USD weakness persisted. However, concerns about US-China trade tensions and a dovish Reserve Bank of Australia (RBA) outlook limited the Aussie’s gains.
Outlook:
Today’s ISM Services PMI and JOLTS data could offer the USD some reprieve. With a cautious backdrop, the AUD may struggle to maintain its recent momentum, especially as markets await key US data later this week.
Final Summary
USD struggled across the board on Monday due to improved risk sentiment, but upcoming US economic data could offer a recovery opportunity. Eurozone CPI data and Canadian political developments will also influence the markets today. Clients with USD exposure should consider covering future needs while the USD remains under pressure.