25/04/2025
Written by: Ian Morley
Daily Currency Update – 20th February 2025
GBPEUR
Summary: Pound Sterling strengthened against the Euro following better-than-expected UK inflation data, which reduced expectations of aggressive rate cuts from the Bank of England. Meanwhile, the Euro remains under pressure after the European Commission’s Consumer Confidence Index highlighted persistent economic concerns.
Outlook: The UK Retail Sales report and PMI data due later this week will be key for Sterling’s next move. For the Euro, ongoing tariff threats from the US and economic stagnation in Germany may continue to weigh on sentiment.
GBPUSD
Summary: GBP/USD climbed above 1.2600 as investors took a less fearful stance on Trump’s tariff plans. Markets also reacted to the Federal Reserve minutes, which suggested that US policymakers remain cautious about cutting interest rates too soon due to inflation risks.
Outlook: Traders will watch for upcoming UK economic data, particularly PMI figures, to gauge BoE rate expectations. On the US side, speeches from Fed policymakers and fresh economic indicators could drive further movement in the pair.
EURUSD
Summary: EUR/USD fell below 1.0450 as the US Dollar gained traction following the FOMC minutes. Trump’s renewed tariff threats, particularly on EU car imports, added further pressure on the Euro.
Outlook: The Eurozone’s economic weakness continues to be a concern, with upcoming German retail sales and confidence indicators likely to shape expectations for the ECB’s next moves. US data and Fed rhetoric will also be key in determining whether the USD can extend its gains.
USDCAD
Summary: USD/CAD stabilised above 1.4200 as Trump’s tariff announcements added to uncertainty in Canadian markets. Inflation data from Canada showed a slight uptick, leading to speculation that the Bank of Canada may rethink its easing stance.
Outlook: The market will focus on any further developments regarding Trump’s trade policies, as well as economic releases from both the US and Canada. A more hawkish BoC stance could offer support to the CAD.
AUDUSD
Summary: The Australian Dollar initially strengthened on hints from Trump that a trade deal with China is possible, but gains were limited as concerns over tariffs on key Australian exports lingered. The RBA’s recent interest rate cut also continued to weigh on the currency.
Outlook: With China’s central bank keeping rates unchanged, the Aussie Dollar may take its next cues from global risk sentiment and US Dollar movements. Any shift in Trump’s trade rhetoric could also drive volatility.
USDCHF
Summary: USD/CHF edged lower to around 0.9025 as renewed trade tensions boosted safe-haven demand for the Swiss Franc. While the Fed’s cautious stance offered some support to the USD, concerns over Trump’s trade war plans limited upside momentum.
Outlook: The Swiss Franc may continue to see safe-haven inflows if global trade risks escalate. However, further USD strength could emerge if Fed policymakers push back on rate cut expectations in upcoming speeches.
Final Summary:
The Pound has held firm following strong inflation data, while the Euro remains under pressure amid economic concerns and Trump’s trade threats. The US Dollar has found support from the Fed’s cautious stance, but risk sentiment remains fragile due to ongoing geopolitical uncertainty. Key economic data releases later this week, including UK retail sales and US PMI figures, will be crucial in shaping the next moves in the FX market.