25/04/2025
Written by: Ian Morley
Daily Currency Update – 12th March 2025
GBPEUR
Summary: The Pound fell against the Euro, dropping towards 1.1845 as markets digested expectations of Bank of England (BoE) rate cuts later in the year. Concerns over slowing UK growth have weighed on Sterling, while the Euro found support after the European Central Bank (ECB) signalled a cautious approach to future rate cuts.
Outlook: We will be watching UK GDP data on Friday for further signs of economic weakness. If growth continues to slow, Sterling may face additional pressure. Meanwhile, the Euro’s performance will depend on market sentiment regarding ECB policy and broader risk trends.
EURUSD
Summary: The Euro weakened against the US Dollar, retreating from five-month highs to trade around 1.0900. The US Dollar rebounded following fresh US tariffs on steel and aluminium imports, including those from key trading partners. Meanwhile, market bets on the ECB implementing two additional rate cuts by the summer weighed on the Euro.
Outlook: The key driver today will be the US inflation data, with expectations that headline CPI will have decelerated slightly. If inflation remains stubborn, the Federal Reserve (Fed) may delay rate cuts, strengthening the USD further. Conversely, weaker-than-expected inflation data could provide relief to the Euro.
GBPUSD
Summary: The Pound held firm against the US Dollar, trading near four-month highs of 1.2965 before retreating slightly. Market participants await the US inflation report, which could provide clarity on the Fed’s rate-cut trajectory.
Outlook: With the Fed’s policy stance closely tied to inflation data, any signs of persistent inflation could reinforce USD strength. Meanwhile, UK economic indicators, including GDP and industrial production data, will also be closely watched for potential Sterling movements.
USDCAD
Summary: USD/CAD edged higher, trading above 1.4450 as traders positioned for today’s Bank of Canada (BoC) rate decision. The BoC is widely expected to cut rates by 25 basis points to 2.75%, adding downward pressure on the Canadian Dollar.
Outlook: If the BoC signals further rate cuts, CAD may weaken further. However, oil price fluctuations and any developments in US-Canada trade relations will also be key factors influencing CAD performance.
AUDUSD
Summary: The Australian Dollar struggled, declining amid broad risk aversion and growing trade tensions. The announcement of US tariffs on steel and aluminium raised concerns about potential trade retaliation, impacting global sentiment.
Outlook: With the Reserve Bank of Australia (RBA) expected to hold rates steady, external factors such as US economic data and China’s economic outlook will likely drive AUD movement. A stronger-than-expected US CPI reading could weigh further on the AUD.
USDCHF
Summary: USD/CHF gained ground, trading around 0.8840 as renewed demand for the US Dollar supported the pair. The safe-haven Swiss Franc remains in focus amid geopolitical uncertainties, including trade tensions and Middle East developments.
Outlook: The upcoming US inflation data will be the key driver for USD/CHF. A stronger USD could push the pair higher, while increased global uncertainty may boost demand for the Swiss Franc.
Final Summary:
Today’s market action is likely to be driven by the US inflation report, with traders looking for signals on the Fed’s future policy direction. The Pound remains supported by expectations of prolonged higher interest rates from the BoE, while the Euro faces pressure from continued ECB rate-cut bets. The Canadian Dollar awaits the BoC’s rate decision, and risk sentiment remains cautious amid ongoing trade tensions and geopolitical uncertainties.