25/04/2025
Written by: Ian Morley
Daily Currency Update – 21st March 2025
GBPEUR
Summary: The Pound held steady against the Euro, trading around 1.1940 after the Bank of England (BoE) left interest rates unchanged at 4.5%. The decision was widely expected, with only one policymaker voting for a rate cut—fewer than markets had anticipated—Sterling found some support. Meanwhile, the Euro struggled as European Central Bank (ECB) policymakers continued to signal a cautious approach to monetary policy, with expectations of rate cuts later in the year.
Outlook: While the Pound remains supported for now, upcoming UK inflation data will be key for its direction. If inflation remains elevated, expectations for delayed BoE rate cuts could support GBP further. Meanwhile, the Euro will likely remain under pressure amid concerns over potential US tariffs on European goods.
GBPUSD
Summary: The Pound declined against the US Dollar, dropping towards 1.2920 as the Greenback extended its post-Fed rally. The Federal Reserve (Fed) held rates steady at 4.25%-4.50% but signalled that rate cuts are unlikely in the near term. Fed Chair Jerome Powell’s comments about uncertainty regarding Trump’s trade policies and their potential inflationary impact further boosted the USD.
Outlook: The US Dollar could remain firm as investors assess upcoming economic data and the potential impact of new US tariffs. Meanwhile, UK inflation data next week will be key for the Pound’s direction.
EURUSD
Summary: The Euro fell against the Dollar, trading below 1.0850 as the USD strengthened following a series of upbeat US data releases. Strong US jobless claims and manufacturing data boosted confidence in the US economy, while ECB policymakers signalled that rate cuts could come later this year, adding further pressure on the Euro.
Outlook: The market will be watching for US economic data and any further commentary from Fed officials on rate policy. In the Eurozone, upcoming consumer confidence data and discussions on trade tariffs could influence sentiment.
USDCAD
Summary: The Canadian Dollar remained under pressure, with USD/CAD trading near 1.4350 as the US Dollar strengthened. The Bank of Canada’s recent rate cut and concerns over Trump’s proposed tariffs on Canadian imports have weighed on the Loonie. Political uncertainty in Canada, with reports of a potential snap election, has further dampened sentiment.
Outlook: The Canadian Dollar’s outlook will depend on any further developments regarding US-Canada trade tensions. Additionally, oil price movements will play a key role in determining CAD direction.
AUDUSD
Summary: The Australian Dollar weakened against the US Dollar, hovering near 0.6300. Risk sentiment deteriorated amid growing concerns about the economic impact of US trade policies. Weak Australian employment data added to pressure on the AUD, increasing speculation that the Reserve Bank of Australia (RBA) could consider rate cuts later this year.
Outlook: The AUD may remain under pressure if risk aversion continues and US trade tensions escalate. Australian inflation data in the coming weeks will be crucial in shaping RBA policy expectations.
USDCHF
Summary: USD/CHF continued its climb towards 0.8850 after the Swiss National Bank (SNB) cut interest rates by 25 basis points to 0.25%. The rate cut was expected, but the SNB’s lack of clear forward guidance weighed on the Franc. The US Dollar also gained on safe-haven demand amid rising trade tensions.
Outlook: The Swiss Franc may find some support from geopolitical uncertainty, but the rate cut and stronger US economic data could keep USD/CHF elevated. Traders will be monitoring global risk sentiment and any developments in US trade policy.
Final Summary:
The US Dollar continues to strengthen as markets adjust to the Fed’s hawkish stance. The Pound held firm against the Euro but struggled against the USD. The Euro remains under pressure amid ECB rate cut expectations, while the Canadian Dollar is weighed down by trade concerns. The Australian Dollar faces downside risks due to weak economic data, and the Swiss Franc softened following the SNB’s rate cut. Markets will focus on upcoming inflation data and central bank commentary for further direction.