02/10/2025
Written by: Ian Morley
Daily Currency Market Update – 13th May 2025
GBP/EUR
Summary: GBP/EUR remains above 1.1850 following mixed UK employment data and ongoing European Central Bank policy discussions. The UK ILO Unemployment Rate edged up to 4.5% in the three months to March, while wage inflation slowed slightly. ECB officials have signalled that the ongoing policy review will likely reaffirm existing strategies, including quantitative easing.
Outlook: Traders will focus on the ZEW Economic Sentiment surveys from Germany and the broader Eurozone later today, which could influence Euro movement. Meanwhile, Sterling may see further volatility depending on market reactions to UK economic data.
GBP/USD
Summary: GBP/USD is holding steady near 1.3200 as markets anticipate key economic releases later today. While the Pound Sterling remains supported by optimism surrounding the recent US-UK trade agreement, traders are awaiting the UK employment and US Consumer Price Index (CPI) reports for further direction.
Outlook: If US CPI data comes in hotter than expected, the US Dollar may strengthen, pressuring GBP/USD lower. Alternatively, signs of continued resilience in the UK labour market could offer some upside for Sterling.
EUR/USD
Summary: EUR/USD trades cautiously around 1.1100, pressured by concerns over US-EU trade tensions and the strengthening US Dollar. The announcement of a temporary US-China trade truce has lifted confidence in the US economy, reinforcing demand for the Greenback.
Outlook: The US CPI release later today will be a key driver for EUR/USD. If inflation remains stable or shows signs of acceleration, the Dollar could gain further ground, limiting Euro recovery attempts.
USD/AUD
Summary: AUD/USD is hovering above 0.6400 after recovering from early losses. The Australian Dollar found support from improved consumer confidence data, but broader risk sentiment remains cautious ahead of US inflation figures.
Outlook: US CPI data could drive AUD/USD movement, with a stronger-than-expected reading potentially weighing on the Aussie. Developments in US-China trade negotiations will also be crucial in shaping risk sentiment.
USD/CAD
Summary: USD/CAD is holding above 1.3950, supported by optimism surrounding US trade policy. Traders remain focused on US inflation expectations and crude oil price movements, which could impact Canadian Dollar performance.
Outlook: Higher oil prices may lend support to the Canadian Dollar, while a stronger US inflation reading could reinforce the Greenback’s strength. Market participants will closely watch today’s CPI release for fresh direction.
USD/CHF
Summary: USD/CHF has dipped below 0.8450 as the US Dollar consolidates ahead of today’s inflation report. Easing global trade tensions have reduced demand for the safe-haven Swiss Franc, while expectations for further Swiss National Bank rate cuts remain intact.
Outlook: The US CPI report will be pivotal in determining near-term USD/CHF direction. If inflation figures reinforce expectations of tighter Fed policy, the pair could regain upside momentum.
Final Summary
Currency markets are in a holding pattern ahead of key US inflation data, which will shape Federal Reserve policy expectations and influence broader market sentiment. The US Dollar remains firm following the US-China trade truce, while the Euro struggles with ECB rate cut expectations. Sterling holds ground amid trade optimism but faces uncertainty ahead of labour market data. Commodity-linked currencies, including the Australian and Canadian Dollars, are reacting to shifts in risk sentiment and economic indicators. Traders will closely watch CPI results and central bank commentary for fresh market direction.