25/04/2025
Written by: Ian Morley
Daily Currency Update – 11th February 2025
GBPEUR
Summary: Pound Sterling struggled against the Euro on Monday, as comments from Bank of England (BoE) policymaker Catherine Mann suggested that UK businesses may face challenges in raising prices due to weaker consumer demand and job losses. The Euro, however, remains under pressure due to the likelihood of deeper European Central Bank (ECB) rate cuts following trade tensions with the US.
Outlook: The focus today will be on BoE Governor Andrew Bailey’s speech, which could provide further guidance on the UK’s monetary policy. The Euro may remain vulnerable if concerns over deflation in the Eurozone persist, particularly with markets now expecting the ECB deposit rate to fall to 1.87% by December.
GBPUSD
Summary: The Pound posted its third consecutive daily decline against the US Dollar, trading around 1.2350. Sterling was weighed down by dovish BoE comments, while the Dollar held firm due to increased risk aversion following Trump’s latest tariff announcements. The US imposed a sweeping 25% tariff on steel and aluminium imports, with no exemptions, which raised concerns about inflation and the Federal Reserve’s interest rate path.
Outlook: All eyes will be on Fed Chair Jerome Powell’s testimony before Congress today. If Powell adopts a hawkish tone and signals that rates will stay higher for longer, the Dollar could see further strength. The Pound will also take direction from Bailey’s speech, with any additional dovish signals likely to weigh on GBP/USD.
EURUSD
Summary: The Euro extended its losing streak, dropping further towards 1.0300 as markets priced in deeper ECB rate cuts. The weaker Eurozone GDP print and concerns over Trump’s tariff policies are adding to the downside pressure. The US Dollar, meanwhile, remains supported by safe-haven demand amid ongoing trade tensions.
Outlook: Powell’s testimony will be key for the Dollar’s next move. If the Fed remains cautious about cutting rates too soon, EUR/USD could continue its downward trend. Additionally, any further escalation in trade tensions could weigh on the Euro, particularly if retaliatory measures from the EU are announced.
USDCAD
Summary: USD/CAD climbed to 1.4350 as trade tensions escalated following Trump’s decision to remove tariff exemptions on Canadian steel and aluminium imports. Canada’s Industry Minister condemned the move as “totally unjustified” and warned of a clear and calibrated response. The Canadian Dollar remains under pressure amid trade uncertainty, despite recovering oil prices.
Outlook: The key driver for USD/CAD today will be Powell’s testimony, which could impact Fed rate expectations and, in turn, the strength of the US Dollar. Meanwhile, any response from Canada to the US tariffs could influence CAD movement. Traders will also be watching for broader market sentiment surrounding global trade.
AUDUSD
Summary: The Australian Dollar remained under pressure following Trump’s tariff decision, as the removal of trade agreements with key allies, including Australia, weighed on risk appetite. Consumer confidence in Australia edged slightly higher but remains subdued, and expectations of a February rate cut by the Reserve Bank of Australia (RBA) continue to grow.
Outlook: With the RBA increasingly expected to lower rates this month, AUD may remain weak. Traders will also focus on Powell’s comments today. If the Fed maintains a firm stance on keeping rates elevated, AUD/USD could continue to trend lower.
USDCHF
Summary: USD/CHF remained in positive territory above 0.9100, with the Dollar supported by Trump’s latest trade policies and expectations of prolonged Fed rate stability. However, safe-haven demand for the Swiss Franc limited the upside, as geopolitical risks in the Middle East continue to drive cautious sentiment.
Outlook: The Fed’s stance will be crucial for USD/CHF. If Powell signals a more hawkish outlook, the Dollar could strengthen further. However, rising geopolitical tensions or an escalation in trade wars could drive demand for the Swiss Franc, capping gains in the pair.
Final Summary:
Markets remain cautious ahead of Powell’s testimony, with the US Dollar holding firm on trade tensions and safe-haven demand. The Pound and Euro remain under pressure due to dovish BoE and ECB expectations, while trade uncertainty weighs on the Canadian and Australian Dollars. The focus today will be on any signals from Powell regarding the Fed’s policy outlook and any further trade developments from the White House.