25/04/2025
Written by: Ian Morley
Daily Currency Update – 19th March 2025
GBPEUR
Summary: The Euro found support as Germany approved a significant €500 billion spending package, boosting national debt. Meanwhile, market expectations for European Central Bank (ECB) rate cuts this year have decreased.
Outlook: The Euro may retain its strength if sentiment around the spending package remains positive. However, the Bank of England’s interest rate decision on Thursday could bring volatility. Any signs of a dovish stance from the BoE could weigh further on the Pound.
GBPUSD
Summary: The Pound struggled to maintain its position above 1.3000 against the US Dollar, ahead of the Federal Reserve’s interest rate decision. Market sentiment is cautious as investors await guidance from the Fed on future rate paths.
Outlook: If the Fed maintains its current stance but signals caution about future cuts, the Dollar could strengthen, pushing GBP/USD lower. The BoE’s decision later this week will also be pivotal for the pair.
EURUSD
Summary: The Euro saw gains against the Dollar, briefly rising above 1.0950 before retreating below 1.0900. The Dollar held its ground ahead of the Fed’s policy announcement, while the Euro found support from Germany’s significant spending plans.
Outlook: The Fed’s dot plot and economic projections will likely determine the Dollar’s short-term direction. If the Fed appears cautious, the Dollar could weaken, offering the Euro a chance to rebound.
USDJPY
Summary: The Dollar strengthened against the Yen, reaching near 150.00 as the Bank of Japan maintained its accommodative stance, leaving rates unchanged. The BoJ indicated no rush to tighten policy given underlying inflation remains below target.
Outlook: With the Fed and BoE policy decisions looming, USD/JPY may remain volatile. Any hawkish signals from the Fed could see further gains for the Dollar.
USDCAD
Summary: The Dollar rebounded against the Canadian Dollar, trading above 1.4300. A surprise increase in Canada’s annual inflation to 2.6% has added uncertainty, while subdued crude oil prices limit the Loonie’s support.
Outlook: The Fed’s policy decision will guide the pair in the short term. If the Fed signals a cautious outlook, USD/CAD could face downward pressure. Conversely, stronger oil prices may help the CAD recover.
AUDUSD
Summary: The Australian Dollar weakened as the US Dollar maintained its strength ahead of the Fed’s policy decision. Criticism of US trade policies by Australia’s Treasurer, Jim Chalmers, highlighted rising tensions.
Outlook: The Fed’s stance will heavily influence AUD/USD. If the US Dollar strengthens, the AUD may face further pressure. Any progress in trade discussions could provide some relief for the Aussie.
USDCHF
Summary: The Dollar edged higher against the Swiss Franc, trading near 0.8770. Investors are focused on the Fed’s policy decision, while the Swiss National Bank is expected to cut rates to 0.25% later this week.
Outlook: The SNB’s anticipated rate cut may weaken the Franc, but geopolitical tensions could increase safe-haven demand, potentially supporting CHF. The Fed’s outlook will be critical for this pair’s direction.
Final Summary:
All eyes are on the Federal Reserve’s policy decision and its projections, with the Dollar’s strength hanging in the balance. The Bank of England’s rate decision later this week will also drive volatility, especially for GBP pairs. Geopolitical developments and trade tensions remain key market influences.