25/04/2025
Written by: Ian Morley
Daily Currency Update – 10th February 2025
GBPEUR
Summary: The Pound strengthened against the Euro on Friday, with GBP/EUR trading around 1.2030. The Euro struggled following concerns over potential US tariffs on the Eurozone, while the Bank of England’s cautious approach to monetary policy supported the Pound. Expectations of further rate cuts from the ECB also weighed on the Euro.
Outlook: Attention will be on ECB President Christine Lagarde’s speech today, where any hints of further rate cuts could put additional pressure on the Euro. Meanwhile, the BoE’s gradual approach to rate reductions may provide support for the Pound, but inflation risks remain a factor to watch.
GBPUSD
Summary: The Pound saw some losses against the US Dollar, slipping below 1.2400 as the Dollar gained strength. The Dollar was supported by expectations that the Federal Reserve will maintain higher interest rates for longer following better-than-expected employment data. Additionally, President Trump’s announcement of upcoming reciprocal tariffs has increased demand for safe-haven assets like the Dollar.
Outlook: Traders will be watching the US Consumer Price Index (CPI) data due later this week for further insight into inflation trends. Any signals from the BoE regarding future rate cuts could also impact GBP/USD, with the market currently pricing in further easing this year.
EURUSD
Summary: The Euro initially gained against the Dollar before reversing lower, trading around 1.0300. The ECB’s decision to cut interest rates by 25 basis points weighed on the currency, and concerns over Trump’s potential tariffs on European goods further pressured the Euro. The US Dollar remained firm following strong employment data and a cautious Fed outlook.
Outlook: Investors will be looking for further clues from ECB President Lagarde’s speech today. Any indications of additional rate cuts could drive EUR/USD lower. Additionally, traders will focus on Fed Chair Jerome Powell’s testimony before Congress this week, which could provide further direction for the Dollar.
USDCAD
Summary: The Canadian Dollar weakened against the US Dollar, with USD/CAD rising to around 1.4350. The move was driven by concerns over potential US tariffs on Canadian steel and aluminium exports, along with the Fed’s hawkish stance. Canada’s strong employment data on Friday initially provided some support, but broader market sentiment favoured the US Dollar.
Outlook: Further developments on Trump’s trade policies will be key for USD/CAD. The Canadian economy remains resilient, but any escalation in trade tensions could lead to further weakness in the CAD. The market will also be watching the upcoming US inflation data for signs of Fed policy direction.
AUDUSD
Summary: The Australian Dollar faced pressure as US President Donald Trump reiterated plans to impose 25% tariffs on steel and aluminium imports. AUD/USD initially declined but later rebounded slightly, trading above 0.6270. The Reserve Bank of Australia is widely expected to cut rates at its next meeting, adding to downward pressure on the currency.
Outlook: The Aussie remains vulnerable to further declines, particularly if trade tensions between the US and China escalate. Additionally, US economic data this week, particularly the CPI release, will be closely monitored for potential impacts on the US Dollar.
USDCHF
Summary: The US Dollar strengthened against the Swiss Franc, with USD/CHF rising above 0.9100. Stronger US employment data supported the Dollar, while ongoing geopolitical uncertainty in the Middle East kept demand for the safe-haven Franc intact.
Outlook: The Swiss Franc could see further gains if global uncertainty persists, but the Fed’s cautious stance may keep the US Dollar supported. Traders will also be paying attention to any policy signals from the Swiss National Bank regarding future rate decisions.
Final Summary:
The US Dollar remains firm amid strong employment data and expectations of prolonged higher interest rates from the Fed. The Euro is under pressure due to ECB rate cuts and potential US tariffs, while the Pound remains relatively stable as the BoE adopts a cautious approach. Commodity currencies such as the CAD and AUD are vulnerable to Trump’s trade policies, and market focus will now shift to key economic data releases later this week, including US inflation figures.