25/04/2025
Written by: Ian Morley
Daily Currency Update – 7th February 2025
GBPEUR
Summary: The Pound weakened against the Euro after the Bank of England (BoE) cut interest rates by 25 basis points to 4.5% as expected. The vote split was notable, with two members of the Monetary Policy Committee pushing for a larger 50 bps cut, signalling concerns over the UK’s economic outlook. The BoE also revised GDP growth forecasts downward, adding further pressure on Sterling. Meanwhile, the Euro found support as European Central Bank officials maintained a cautious approach despite ongoing speculation of further rate cuts.
Outlook: The BoE’s dovish stance could continue to weigh on Sterling, particularly if markets begin to price in further rate cuts. Meanwhile, any additional comments from ECB officials regarding inflation or monetary policy could influence the Euro’s movement.
GBPUSD
Summary: The Pound traded lower against the US Dollar following the BoE’s rate cut and dovish outlook. However, GBP/USD stabilised above 1.2400 as investors turned their attention to upcoming US Nonfarm Payrolls (NFP) data, which is expected to show job growth slowing to 170K in January.
Outlook: Today’s NFP report will be the key driver for GBP/USD. A stronger-than-expected print could boost the Dollar and push the pair lower, while weaker data may allow Sterling to recover some losses. Additionally, any fresh tariff-related comments from US President Donald Trump could impact market sentiment.
EURUSD
Summary: The Euro struggled against the Dollar, slipping below 1.0400 as markets digested the ECB’s latest stance and concerns over Trump’s tariff threats towards the EU. ECB policymakers signalled a willingness to cut rates further if necessary, keeping the Euro under pressure. Meanwhile, the US GDP report showed a slowdown in economic growth, but the Dollar remained firm ahead of today’s labour market data.
Outlook: US NFP data will be the main focus today. A strong jobs report could reinforce expectations that the Fed will keep rates steady for longer, pushing EUR/USD lower. Conversely, any signs of weakness in the US labour market may provide some relief for the Euro.
USDCAD
Summary: USD/CAD remained steady around 1.4300 as markets awaited Canadian labour market data. The Canadian economy is expected to have added significantly fewer jobs in January compared to December, with the unemployment rate projected to rise to 6.8%. The recent delay in Trump’s proposed tariffs on Canadian imports provided some temporary relief for the Canadian Dollar.
Outlook: Today’s Canadian employment report will be key for USD/CAD. If job growth disappoints, CAD could weaken further. Meanwhile, US labour market data and any updates on US trade policy will also influence the pair’s movement.
AUDUSD
Summary: The Australian Dollar remained under pressure, trading near recent lows as markets continued to price in an expected rate cut from the Reserve Bank of Australia (RBA). Market sentiment was cautious ahead of the US NFP report, while easing US-China trade tensions provided some temporary support for the AUD.
Outlook: The AUD remains vulnerable, with expectations of an RBA rate cut keeping it on the back foot. A strong US jobs report could add to the pressure, while any unexpected dovish shift from the Fed may help the Aussie stabilise.
USDCHF
Summary: The US Dollar gained ground against the Swiss Franc, with USD/CHF rising above 0.9050. A cautious market sentiment ahead of the US NFP report supported the Dollar, while escalating geopolitical tensions in the Middle East added to safe-haven flows into the CHF.
Outlook: If today’s NFP report strengthens the case for the Fed to remain patient with rate cuts, USD/CHF could push higher. However, any signs of weakness in the US jobs data or an increase in geopolitical tensions could boost demand for the Swiss Franc.
Final Summary:
Today’s market focus is firmly on the US Nonfarm Payrolls report, which will set the tone for the US Dollar’s near-term direction. The Pound remains under pressure following the BoE’s dovish rate cut, while the Euro faces headwinds from ECB policy uncertainty and US trade risks. The Canadian Dollar is vulnerable ahead of its jobs report, and the Australian Dollar struggles as expectations of an RBA rate cut weigh on sentiment.