25/04/2025
Written by: Ian Morley
Daily Currency Update – 11th March 2025
GBPEUR
Summary: Pound Sterling weakened against the Euro as GBPEUR fell towards 1.1840. The Euro was supported by reports that the European Union is considering boosting defence spending through joint borrowing and EU funds, which helped improve sentiment around the currency. Additionally, Germany’s Green Party appears ready to negotiate a defence spending deal with the incoming coalition, further stabilising the Euro.
Outlook: The focus will be on economic stimulus measures and how they might impact the European Central Bank’s rate policy. If inflationary pressures increase, it could limit the scope for further ECB rate cuts. Meanwhile, the Pound remains underpinned by recent Bank of England commentary, suggesting a slower approach to monetary easing. We will also monitor UK GDP data set to be released later this week.
GBPUSD
Summary: The Pound held steady against the US Dollar, trading around 1.2900, as markets awaited key US inflation data. The Dollar struggled to gain traction due to fears of a potential economic slowdown in the US, following President Trump’s remarks about a “transition period.” Federal Reserve rate cut expectations have risen, with markets now pricing in a 51% chance of a cut in May.
Outlook: The key focus for GBP/USD customers will be Wednesday’s US Consumer Price Index (CPI) release, which will provide insight into inflationary trends. A weaker-than-expected CPI could fuel expectations of more aggressive Fed rate cuts, pressuring the Dollar. Meanwhile, UK GDP data at the end of the week will also be closely watched for signs of economic resilience.
EURUSD
Summary: The Euro held its ground against the US Dollar, with EUR/USD trading near 1.0850. The Euro benefited from improved sentiment surrounding EU defence spending plans, while the Dollar struggled amid recession concerns and falling US Treasury yields.
Outlook: With US inflation data due on Wednesday, the Dollar’s next move will depend heavily on whether the CPI figures confirm expectations of a gradual slowdown in price growth. A softer reading could weigh on the USD further, while a higher-than-expected inflation print may delay Fed rate cut expectations and support the Dollar.
USDCAD
Summary: The Canadian Dollar strengthened slightly, with USD/CAD trading near 1.4440, as expectations of an economic slowdown in the US weighed on the Greenback. However, the market is still anticipating a rate cut from the Bank of Canada at its upcoming meeting, which limited CAD’s upside.
Outlook: We will watch Wednesday’s BoC meeting closely to see if policymakers signal further rate cuts. If the BoC adopts a more dovish tone, CAD could weaken. Meanwhile, US inflation data will also play a key role in determining USD/CAD’s next direction.
AUDUSD
Summary: The Australian Dollar weakened for a fourth consecutive session, despite an improvement in consumer confidence. Trade tensions between the US and China continue to weigh on the Aussie, with China’s retaliatory tariffs on US agricultural products adding to market uncertainty.
Outlook: With trade negotiations between the US and China at a deadlock, the Australian Dollar could remain under pressure. We will be closely watching US CPI data and any developments in US-China relations for further clues on AUD/USD’s direction.
USDCHF
Summary: The Swiss Franc gained against the US Dollar, with USD/CHF dropping to 0.8800 as investors sought safe-haven assets amid economic uncertainty. Concerns over a global trade war and the potential for a slowdown in US growth kept the Dollar under pressure.
Outlook: The focus will be on US inflation data, which could determine the Fed’s rate path. If the data supports further rate cuts, the Dollar could weaken further, potentially pushing USD/CHF lower.
Final Summary:
Markets remain focused on US economic data, with inflation figures due this week set to drive sentiment. The Dollar remains under pressure as recession fears grow, while the Euro and Swiss Franc have benefited from safe-haven demand and improved sentiment around EU economic measures. The Bank of Canada’s rate decision will be a key event for the Canadian Dollar, while trade tensions continue to weigh on the Australian Dollar.