02/10/2025
Written by: Ian Morley
Daily Currency Market Update – 14th May 2025
GBP/EUR
Summary: GBP/EUR is holding steady around 1.1880, despite a slight uptick in German inflation figures. The latest Harmonised Index of Consumer Prices (HICP) report showed a 2.2% rise in April, aligning with market expectations. European Central Bank officials remain divided on future rate cuts, with Board Member Isabel Schnabel cautioning against further easing. Meanwhile, Sterling sentiment remains weighed down by expectations for additional Bank of England rate cuts.
Outlook: The pair’s near-term movement will likely depend on further ECB policy guidance and upcoming UK growth figures due later this week. Political uncertainty in the Eurozone could also play a role in shaping sentiment.
GBP/USD
Summary: GBP/USD is consolidating above 1.3300 after Tuesday’s 1% rally, driven by a weaker US Dollar following softer-than-expected inflation data. The Consumer Price Index (CPI) and core CPI both rose by 0.2% month-over-month, below the 0.3% forecast, leading to a decline in rate cut expectations.
Outlook: We will be watching upcoming US Producer Price Index (PPI) data and consumer sentiment readings for further insights into inflation trends. Meanwhile, UK economic releases later this week, including Q1 GDP figures, may impact Sterling’s direction.
EUR/USD
Summary: EUR/USD surged nearly 1% on Tuesday, stabilising around 1.1200 in early European trading. The weaker US CPI print weighed on the Dollar, while easing trade tensions between the US and China provided some relief for the Euro.
Outlook: The pair’s movement will depend on upcoming US inflation indicators and central bank commentary. If Federal Reserve officials maintain a cautious stance on rate cuts, EUR/USD could see further upside.
USD/AUD
Summary: AUD/USD holds its ground above 0.6470 following stronger-than-expected Australian wage growth figures. The Wage Price Index rose by 0.9% in Q1, surpassing the expected 0.8% increase. The Australian Dollar has also gained from softer US inflation data, as markets reassess Federal Reserve rate expectations.
Outlook: The focus now shifts to Australian employment data due on Thursday. If job figures exceed expectations, the Aussie could extend its gains.
USD/CAD
Summary: USD/CAD remains above 1.3900 but lost ground on Tuesday, snapping a four-day winning streak. The pair has struggled amid softer US inflation data and weaker Canadian consumer confidence. Meanwhile, crude oil prices remain subdued, limiting CAD’s upside.
Outlook: Canadian employment figures later this week and upcoming US inflation data will be key for USD/CAD direction. Oil market developments will also influence CAD performance.
USD/CHF
Summary: USD/CHF has broken below 0.8400 as dovish expectations surrounding Swiss National Bank (SNB) policy persist. Safe-haven demand for the Swiss Franc weakened slightly as trade tensions between the US and China continued to ease.
Outlook: The SNB’s policy stance will remain a key factor for USD/CHF. Meanwhile, US inflation trends and trade developments could create further volatility.
Final Summary
Currency markets are reacting to softer US inflation data and shifting central bank expectations, with the US Dollar losing ground against most major pairs. Sterling remains stable ahead of key UK economic releases, while the Euro is benefiting from easing trade tensions and reduced rate cut bets. Commodity-linked currencies, including the Australian and Canadian Dollars, are responding to domestic data releases and broader market trends. We will closely watch upcoming economic figures and policy announcements for further direction.