02/10/2025
Written by: Ian Morley
Daily Currency Update – 7th March 2025
GBPEUR
Summary:
The Pound fell against the Euro yesterday, with the pair moving down to around 1.1904. The weakness in Sterling came after the European Central Bank’s latest policy decision, where they cut rates by 25 basis points as expected. However, ECB President Christine Lagarde struck a more hawkish tone during her press conference, indicating that future rate moves will be data-dependent rather than committing to further cuts, which provided some support for the Euro.
Outlook:
The outlook for GBPEUR will largely depend on how UK and Eurozone data progresses. While markets expect the Bank of England to move cautiously on rates, any signs of resilience in UK data could help support Sterling. Meanwhile, the Euro could remain supported if future ECB rate cuts appear less certain. Next week’s UK labour market data and further Eurozone economic releases will be the key drivers.
GBPUSD
Summary:
Sterling held firm against the US Dollar, with GBP/USD hovering near 1.2900 after touching a multi-month high above 1.2920 on Thursday. The Dollar remained under pressure as the market continues to price in future rate cuts from the Federal Reserve, driven by concerns around slower US growth and the impact of Trump’s trade policies.
Outlook:
Today’s focus will be firmly on the US Nonfarm Payrolls report, which is expected to show 160,000 new jobs in February. Any sign of labour market weakness could reinforce expectations for Fed rate cuts, potentially boosting GBP/USD further. However, strong wage growth or a higher job number could provide temporary relief for the Dollar. In the medium term, Sterling will be influenced by the BoE’s policy outlook, particularly after recent comments from Catherine Mann warning against a cautious approach to easing.
EURUSD
Summary:
EUR/USD held above 1.0800, sitting close to a four-month high. The Dollar struggled as Treasury yields fell and traders increasingly expect the Fed to cut rates later this year. The ECB’s 25bp rate cut was widely expected, but Christine Lagarde’s cautious and data-driven stance limited any downside for the Euro.
Outlook:
Today’s US employment data will be the key driver for EUR/USD. If job growth and wage data disappoint, we could see the pair push higher towards 1.0900. However, strong data would provide temporary support for the Dollar. Markets will also monitor any updates on Trump’s trade tariffs, which could impact global risk sentiment and the USD’s safe-haven appeal.
USDCAD
Summary:
USD/CAD stabilised around 1.4300 after a three-day decline. The pair found some support as oil prices softened and traders adjusted positions ahead of today’s Canadian and US jobs data. The Canadian dollar had been supported recently by speculation that the Bank of Canada could pause rate cuts, while the US Dollar struggled under the weight of weaker data and trade uncertainty.
Outlook:
Canadian jobs data will be closely watched today, with unemployment expected to tick up to 6.7%. If the data surprises to the upside, CAD could strengthen further. However, softer data or lower oil prices could support USD/CAD. In the medium term, the pair will remain sensitive to how the Fed and BoC policy paths diverge, particularly with Trump’s tariff policies hanging over North American trade.
AUDUSD
Summary:
The Australian Dollar weakened again, trading near 0.6300 as traders took a cautious stance ahead of the US jobs report. AUD was also under pressure following China’s trade data, which showed a sharp decline in imports. Concerns around Trump’s trade policies and China’s response have also weighed on the Aussie.
Outlook:
If today’s US jobs data comes in softer than expected, AUD/USD could find some relief. However, ongoing trade tensions between the US and China will remain a headwind for the Australian Dollar, especially given China’s importance to Australia’s economy. Next week’s Chinese inflation and Australian business confidence data will also be closely watched.
USDCHF
Summary:
USD/CHF continued to weaken, falling below 0.8850 as the US Dollar came under further pressure. Safe-haven flows into the Swiss Franc helped push the pair lower, with markets still nervous about the economic fallout from Trump’s tariff plans and broader trade uncertainty.
Outlook:
The focus today will be on the US jobs report. A weak report could accelerate USD/CHF’s decline, with the next key support level around 0.8800. However, if the jobs data is stronger than expected, the pair could see a short-term bounce. Broader global risk sentiment and any further trade war developments will also influence the safe-haven appeal of the Franc.
Final Summary:
Markets are firmly focused on today’s US Nonfarm Payrolls report, which will set the tone for the Dollar in the short term. Sterling remains relatively firm against both the Dollar and Euro, but the outlook is clouded by diverging central bank policies and ongoing geopolitical uncertainty. The Euro is holding up well after the ECB’s cautious messaging, while the Australian Dollar remains vulnerable to trade concerns and weak Chinese data. The Swiss Franc continues to benefit from safe-haven flows, while the Canadian Dollar is holding up ahead of key domestic data. Expect volatility to pick up once today’s US jobs data is released.