25/04/2025
Written by: Ian Morley
GBPEUR
Summary:
The pound initially pushed just above 1.17 against the euro on Tuesday, before reversing course following softer-than-expected UK inflation data. March CPI came in at 2.6%, down from 3.4% previously and below forecasts. The release reinforced expectations for a Bank of England rate cut in May, which weighed on sterling and dragged GBPEUR back down to around 1.1660 this morning.
Outlook:
The near-term outlook for the pair will hinge on tomorrow’s ECB decision. While the euro is also under pressure from rate cut expectations, the inflation-driven pullback in the pound could continue if the ECB adopts a cautious tone without committing to immediate easing. Broader sentiment remains fragile, and both currencies are vulnerable to shifts in central bank guidance.
EURUSD
Summary:
EUR/USD has bounced back strongly, pushing above 1.1350 as broad US dollar weakness continues. The move follows cooling US CPI data and the growing belief that President Trump’s tariff policies could lead the US economy into recession. A pause in reciprocal tariffs offered limited relief, and markets remain concerned about retaliatory measures from key trade partners.
Outlook:
Further upside for the euro may hinge on ECB rhetoric following its rate decision tomorrow. If the ECB adopts a dovish tone while the Fed holds steady, EUR/USD may stall. However, continued pressure on the dollar amid global trade concerns could see the pair target the 1.14–1.15 region.
GBPUSD
Summary:
Sterling remains firm against the dollar, trading around 1.3290 after CPI data in the UK showed slowing inflation. The pound’s resilience is underpinned by optimism surrounding a potential UK-US trade deal and hopes that Britain will avoid the worst effects of the US trade war.
Outlook:
While softer UK inflation raises the likelihood of BoE rate cuts, dollar weakness is the dominant theme. With Fed rate cuts being priced in and trade war fears lingering, GBP/USD could remain elevated in the near term.
USDAUD
Summary:
The Australian dollar continues to advance against the greenback, supported by stronger-than-expected Chinese data and relief after key technology goods were exempt from US tariffs. AUD/USD is holding steady around 0.6350 despite weaker domestic leading index data.
Outlook:
Thursday’s employment figures from Australia will be critical. If the data disappoints, it could trigger a pause in the AUD rally. Broader sentiment remains bullish for AUD in the short term, given global risk resilience and China’s supportive growth.
USDCAD
Summary:
USD/CAD is flat near 1.3950 as markets await the Bank of Canada’s rate announcement. Softer Canadian CPI data earlier in the week has added pressure on the CAD, though oil prices and US data are also influencing direction.
Outlook:
Any dovish tone from the BoC could push the pair higher, though a firm stance might help the Loonie recover. Meanwhile, US retail sales and further trade rhetoric will play into short-term direction.
USDCHF
Summary:
The dollar is sliding against the franc again, with USD/CHF back in the mid-0.8100s. The decline follows renewed fears of a US-led recession as markets digest the implications of Trump’s tariffs. Safe-haven demand continues to favour the Swiss franc.
Outlook:
As long as global uncertainty prevails and Fed rate cuts are priced in, the franc is likely to stay supported. Traders are awaiting Powell’s comments later today, which could shift sentiment if the Fed signals a more hawkish tilt.
Final Summary:
The US dollar remains under heavy pressure as markets brace for further fallout from President Trump’s trade policies. While the pound is finding pockets of strength, especially against the dollar, it remains sensitive to rate expectations. The euro is performing well amid dollar weakness but may struggle if the ECB leans dovish. Risk sentiment remains fragile, and central bank responses over the next 48 hours will be key in shaping short-term currency moves.