06/02/2025
GBPEUR
Summary
The Pound remains under pressure, with GBP/EUR continuing its downward trajectory. Concerns over stagflation and fiscal policy uncertainty in the UK weigh heavily on the currency, exacerbated by growing tensions between the UK government and the bond market. The Euro has also faced pressure from dovish European Central Bank (ECB) comments suggesting further rate cuts may be needed to avoid slowing economic growth.
Outlook
With key UK data releases this week—including CPI figures on Wednesday, GDP on Thursday, and retail sales on Friday—any further negative surprises are likely to deepen GBP losses. Meanwhile, the ECB’s dovish stance may keep the Euro under pressure, but relative weakness in GBP suggests a continued upward trend for EUR/GBP in the near term.
GBPUSD
Summary
GBP/USD has dropped to its lowest level since November 2023. The US Dollar gained significant strength following a stronger-than-expected Nonfarm Payrolls (NFP) report, which showed the US economy created 256,000 jobs in December, and the unemployment rate fell to 4.1%. This solidifies expectations that the Federal Reserve will pause its rate-cutting cycle.
Outlook
The path for GBP/USD looks increasingly bearish, with continued fiscal uncertainty and stagflation fears in the UK weighing heavily on sentiment. For the US, all eyes are on the CPI report this week. A stronger-than-expected inflation print could push USD higher, potentially driving GBP/USD below the 1.2100 mark.
EURUSD
Summary
EUR/USD slid to fresh two-year lows near 1.0200 as the US Dollar remains buoyed by robust economic data and soaring bond yields. Hawkish signals from the Federal Reserve contrast sharply with dovish commentary from the ECB, where policymakers hinted at further rate cuts.
Outlook
The Euro may remain under pressure as traders reassess the Fed’s policy trajectory, especially if US CPI data comes in hotter than expected. While the ECB’s dovish tone weighs on the Euro, further losses could push EUR/USD below the critical 1.0200 support level in the coming days.
AUDUSD
Summary
The Australian Dollar continues to weaken, trading at its lowest levels since April 2020. Expectations of a potential rate cut by the Reserve Bank of Australia (RBA) next month, coupled with a stronger US Dollar, have kept the Aussie under significant pressure.
Outlook
Australian employment data later this week will be a key focus for AUD/USD traders. If the data disappoints, it could reinforce expectations of an RBA rate cut, driving AUD/USD lower. In the meantime, strong US economic fundamentals and rising Treasury yields suggest continued strength for the Greenback.
USDCAD
Summary
USD/CAD remains elevated near 1.4450, supported by strong US economic data and higher Treasury yields. Rising oil prices have provided some support to the Canadian Dollar, but broader risk-off sentiment and trade uncertainty have kept the Loonie on the back foot.
Outlook
The pair could continue to edge higher as long as the USD retains its strength. However, rising oil prices may act as a counterbalance, limiting CAD losses. A move above 1.4500 could materialise if upcoming US CPI data reinforces hawkish Fed expectations.
Final Summary
The US Dollar remains dominant across the board, buoyed by robust economic data and rising bond yields, while the Pound and Euro struggle under the weight of domestic uncertainties. This week’s CPI data from the US and the UK’s upcoming economic releases will likely shape the next moves in the FX market. Prepare for further volatility as these key reports unfold.