25/04/2025
Written by: Ian Morley
Daily Currency Update – 18th March 2025
GBPEUR
Summary: The Pound fell against the Euro, dropping to around 1.1860. The decline comes amid ongoing concerns over the UK’s economic outlook and expectations of further Bank of England rate cuts. Meanwhile, the Euro found support as investors awaited key data releases later this week.
Outlook: If UK data continues to show economic strain, the Pound could remain under pressure. Markets will also closely monitor any comments from ECB officials, especially if they suggest a more cautious approach to further rate cuts.
EURUSD
Summary: The Euro remained resilient against the US Dollar, holding above the 1.09 level. Optimism surrounding the German debt vote and expectations of a pause in the ECB’s rate-cutting cycle supported the Euro, while the Dollar struggled due to disappointing US retail sales data.
Outlook: Should the German spending plan be approved, the Euro may find additional support. However, any resurgence of US Dollar strength, driven by safe-haven demand amid geopolitical risks, could limit EUR/USD upside.
GBPUSD
Summary: GBP/USD climbed to just under 1.30, bolstered by the Pound’s strength and a vulnerable US Dollar. The Greenback faced pressure from underwhelming retail sales data and lingering concerns over the impact of Trump’s trade policies.
Outlook: The Fed’s upcoming rate decision could create volatility. If the Fed maintains a cautious stance, the Dollar could remain weak, benefiting GBP/USD. However, any surprising hawkish commentary from the Fed may reverse Sterling’s gains.
USDCAD
Summary: USD/CAD slipped below 1.43, weighed down by a firmer Canadian Dollar ahead of inflation data due later today. The Loonie also found support from a recovery in crude oil prices.
Outlook: Canadian inflation data will be pivotal in shaping the BoC’s next moves. A higher-than-expected CPI print could bolster the CAD further, while weaker data may provide some relief to USD/CAD.
AUDUSD
Summary: The Australian Dollar remained under pressure against the US Dollar as geopolitical tensions weighed on risk sentiment. The US reaffirmed its military stance in the Middle East, dampening demand for risk-sensitive currencies like the AUD.
Outlook: Market focus will shift to the Fed’s rate decision and any further trade-related announcements from the US. A cautious Fed could provide some relief for the AUD, while rising geopolitical tensions may keep it subdued.
USDCHF
Summary: USD/CHF traded flat near 0.8810, with safe-haven demand supporting the Swiss Franc amid escalating Middle East tensions. The Dollar’s performance was mixed as it struggled with weak retail sales data.
Outlook: The upcoming Fed and SNB rate decisions will be closely monitored. The Fed’s guidance on future policy will be key for USD/CHF, while any further escalation in geopolitical tensions could bolster the Franc.
Final Summary: The focus for today remains on the German spending plan vote, Canadian inflation data, and the upcoming Fed rate decision. Geopolitical developments, particularly in the Middle East, are likely to influence safe-haven flows, impacting the US Dollar and the Swiss Franc. Market sentiment is cautious as traders await crucial economic data and central bank updates.