01/10/2025
Written by: Ian Morley
Daily Currency Market Update – 15th May 2025
GBP/EUR
Summary: GBP/EUR is holding firm above 1.1800 following stronger-than-expected UK GDP figures. The UK economy expanded by 0.7% quarter-on-quarter in Q1, surpassing expectations of 0.6%. Meanwhile, the Euro remains under pressure as markets price in a high probability of a European Central Bank rate cut in June, with further easing expected later in the year.
Outlook: Investors will be watching the upcoming Eurozone GDP revision and employment data. If European figures disappoint, the Euro could weaken further, supporting GBP/EUR gains.
GBP/USD
Summary: GBP/USD climbed to 1.3300 after softer-than-expected US inflation data reinforced market expectations that the Federal Reserve will maintain its current rate stance. Despite this, Fed Chair Powell’s speech later today could offer further insights into the central bank’s policy outlook. UK GDP figures boosted Sterling sentiment but declines in industrial and manufacturing production limited upside.
Outlook: Powell’s speech and US Producer Price Index (PPI) data will be key for GBP/USD direction. If Powell signals concern over inflation trends, the US Dollar could recover, pressuring the pair.
EUR/USD
Summary: EUR/USD regained ground above 1.1200 as confidence in the Euro’s reserve status continues to grow, despite expectations for ECB rate cuts. Analysts suggest that US trade policies have weakened global demand for the Dollar, benefiting the Euro.
Outlook: Traders will watch Eurozone economic releases, including the Q1 GDP revision. The outcome of Powell’s speech and US retail sales figures may create volatility.
USD/AUD
Summary: AUD/USD edged higher to 0.6450 as Australia’s employment data exceeded forecasts. The economy added 89,000 jobs in April, well above the expected 20,000, while the unemployment rate remained steady at 4.1%. Risk sentiment improved after US-China trade discussions hinted at tariff reductions.
Outlook: The Australian Dollar’s movement will depend on upcoming global trade developments and US inflation trends. If risk appetite remains firm, AUD/USD could extend gains.
USD/CAD
Summary: USD/CAD softened below 1.4000 as the US Dollar struggled following weaker inflation figures. The Canadian Dollar remains pressured by subdued crude oil prices, though investors are monitoring trade negotiations and upcoming Canadian employment data.
Outlook: Oil price movements and Fed policy expectations will be crucial for USD/CAD. A further decline in crude oil could limit CAD gains, while hawkish Fed commentary may support the US Dollar.
USD/CHF
Summary: USD/CHF trades near 0.8400, pressured by modest US Dollar weakness. Safe-haven demand for the Swiss Franc remains limited due to optimism surrounding the US-China trade truce, but market participants are awaiting Powell’s speech for further cues.
Outlook: Powell’s commentary will be critical for USD/CHF direction. If he signals fewer rate cuts ahead, the US Dollar could see renewed support, lifting the pair.
Final Summary
Currency markets remain cautious ahead of key US economic data and Fed Chair Powell’s speech, which could influence interest rate expectations. Sterling remains supported by better-than-expected UK GDP data, while the Euro is holding steady despite looming ECB rate cuts. The US Dollar struggles following softer inflation figures, benefiting currencies like the Australian and Canadian Dollars. Traders will focus on upcoming central bank commentary and economic releases for further direction.