25/04/2025
Written by: Ian Morley
Daily Currency Update – 21st February 2025
GBPEUR
Summary: The Pound gained against the Euro following better-than-expected UK retail sales data, which rose by 1.7% in January, far exceeding forecasts. Meanwhile, the Euro remained under pressure due to expectations of continued ECB rate cuts throughout 2025.
Outlook: With the ECB expected to cut rates at every meeting until mid-2025, the Euro may continue to face headwinds. Meanwhile, the Pound’s strength could be tested by concerns over sluggish UK economic growth, as highlighted by BoE Governor Bailey. PMI data from both regions today will provide further direction.
GBPUSD
Summary: The Pound continued its upward momentum, reaching a two-month high above 1.2670 after strong retail sales data. The Dollar weakened as US jobless claims rose more than expected, and Treasury yields fell below 4.5%.
Outlook: Investors will be watching today’s US PMI data, which could impact rate cut expectations. If PMI data disappoints, further USD weakness could allow GBP/USD to push higher. However, any hawkish comments from Fed officials today could limit gains.
EURUSD
Summary: EUR/USD rose over 0.7% on Thursday due to broad USD weakness but remains around 1.0500. The Euro remains vulnerable as traders expect further ECB rate cuts, while Trump’s tariff threats add additional pressure.
Outlook: Today’s Eurozone PMI data will be key for short-term movement. If data comes in weaker than expected, the Euro could decline further. Additionally, any fresh USD strength from positive US PMI readings could put downward pressure on the pair.
USDCAD
Summary: USD/CAD remains steady above 1.4150 as the USD struggles amid weak jobless claims data. Meanwhile, concerns over Trump’s potential tariffs on Canadian lumber weigh on the CAD.
Outlook: Traders will be watching Canada’s retail sales data and BoC Governor Macklem’s speech for further clues on policy direction. If inflation concerns persist, the BoC may delay further rate cuts, which could support the CAD.
AUDUSD
Summary: The Australian Dollar initially gained but later edged lower following RBA Governor Bullock’s comments cautioning against rapid monetary easing. Trump’s tariff threats also weighed on market sentiment.
Outlook: The Australian Dollar remains sensitive to risk sentiment. Any signs of progress in US-China trade negotiations could support the AUD, but stronger US PMI data could push the pair lower.
USDCHF
Summary: USD/CHF rebounded to 0.8985 as the Dollar recovered some ground. However, geopolitical tensions and Trump’s trade policies kept demand for the Swiss Franc strong.
Outlook: The pair’s movement will depend on today’s US PMI data and any further geopolitical developments. If risk sentiment deteriorates, safe-haven demand for CHF could increase, capping USD gains.
Final Summary:
The Pound continues to outperform after strong retail sales, while the Euro remains weak due to ECB rate cut expectations. The Dollar struggles amid weak jobless claims and falling yields, with US PMI data today set to drive the next move. Geopolitical concerns and trade tensions continue to impact risk sentiment, influencing safe-haven flows.