25/04/2025
Written by: Ian Morley
Daily Currency Update – 10th March 2025
GBPEUR
Summary: The Pound struggled against the Euro, with GBPEUR testing 1.19 resistance. The Euro found support following Germany’s announcement of a €500 billion infrastructure fund and debt restructuring plan, which has led traders to scale back expectations of further aggressive rate cuts from the ECB. Meanwhile, Bank of England policymaker Catherine Mann signalled support for a swift policy-easing cycle, adding further pressure to Sterling.
Outlook: The Euro’s strength may continue in the near term, especially if the German government’s fiscal stimulus measures lead to upward revisions in inflation expectations. The BoE’s next rate decision will be key, as markets are currently pricing in two more cuts this year. If economic data from the UK disappoints, Sterling could see further downside.
GBPUSD
Summary: The Pound managed to hold above 1.2900 against the US Dollar, supported by ongoing concerns over the US economic outlook. The Dollar weakened further after last week’s poor Nonfarm Payrolls report, which missed expectations, and a rise in the unemployment rate to 4.1%. Investors are now worried that President Trump’s tariff policies could slow US growth, leading some analysts to downgrade GDP forecasts.
Outlook: The market is now anticipating that the Federal Reserve could cut rates as early as June if US economic conditions deteriorate further. In the meantime, investors will be watching the UK’s GDP data and the US CPI inflation release later this week for further clues on the policy outlook. If inflation remains sticky in the US, the Dollar could regain some strength.
EURUSD
Summary: The Euro continued its rally against the US Dollar, trading above 1.0850 and approaching four-month highs. Weak US economic data and concerns over Trump’s trade policies have kept the Dollar under pressure, while the Euro found further support from German fiscal stimulus plans.
Outlook: US inflation data will be the key driver for EUR/USD this week. If US CPI comes in higher than expected, it could reduce rate cut expectations and help the Dollar recover. However, if inflation remains contained, the Euro could continue to push higher.
USDCAD
Summary: The Canadian Dollar weakened slightly, with USD/CAD trading above 1.4350. Markets remain cautious ahead of the Bank of Canada’s rate decision on Wednesday. Meanwhile, Trump hinted over the weekend that planned tariffs on Canadian imports could be increased, adding to CAD’s weakness.
Outlook: If the BoC maintains a dovish stance and signals further rate cuts, CAD could come under more pressure. However, oil price movements will also be crucial—if crude prices rise, they could help limit CAD losses.
AUDUSD
Summary: The Australian Dollar held steady against the US Dollar despite increased global trade tensions. The AUD was supported by stronger-than-expected GDP and trade data but concerns over China’s retaliatory tariffs against the US limited further gains.
Outlook: If US inflation data comes in strong, it could push AUD/USD lower as the Fed may delay rate cuts. Additionally, any further escalation in US-China trade tensions could weigh on the Aussie in the near term.
USDCHF
Summary: The US Dollar weakened further against the Swiss Franc, with USD/CHF dropping below 0.8800. Safe-haven demand for the Franc increased amid rising trade tensions, and speculation that the Swiss National Bank will cut rates later this year provided little support for the USD.
Outlook: If concerns over the US economy persist, the Franc could continue to strengthen. However, traders will also be watching for any intervention signals from the SNB, as the central bank may try to limit excessive CHF appreciation.
Final Summary:
The US Dollar remains under pressure following disappointing economic data and growing concerns over Trump’s trade policies. The Euro continues to strengthen amid reduced expectations of further ECB rate cuts, while the Pound is struggling against the Euro but holding steady against the weaker Dollar. The focus now shifts to US inflation data and central bank policy decisions later this week, which could set the next direction for major currency pairs.