06/02/2025
GBP/EUR
Summary:
The Pound weakened against the Euro as mixed UK employment data weighed on sentiment. The ILO Unemployment Rate rose to 4.4%, while wage growth climbed to 5.6%. Despite the rise in earnings, the prospect of the Bank of England cutting interest rates remains a key driver of GBP weakness. Meanwhile, the Euro held steady amid speculation of significant rate cuts by the European Central Bank.
Outlook:
GBP/EUR could face further volatility as markets digest UK labour market data and await Germany’s ZEW Survey for January. If the survey disappoints, it may limit the Euro’s upside. On the Pound side, dovish expectations for the Bank of England’s monetary policy could keep GBP under pressure.
GBP/USD
Summary:
The Pound fell below 1.2300 against the US Dollar as mixed UK employment data and weaker-than-expected retail sales weighed on sentiment. Meanwhile, the Dollar gained ground following US President Trump’s comments on potential tariffs and strong labour market data.
Outlook:
GBP/USD may face downward pressure if US economic data, including PMI figures later this week, strengthens the Dollar. For the Pound, expectations of rate cuts from the Bank of England are likely to remain a headwind.
EUR/USD
Summary:
The Euro slipped below 1.0400 against the US Dollar due to ongoing dovish sentiment surrounding the ECB’s policy outlook. The Dollar benefitted from renewed tariff discussions and expectations that the Federal Reserve will keep rates steady in the near term.
Outlook:
EUR/USD is likely to remain under pressure as dovish ECB expectations weigh on the Euro. US data later in the week, such as PMI figures, could drive further Dollar strength if results meet or exceed expectations.
USD/CAD
Summary:
The US Dollar rallied to its highest level since March 2020 against the Canadian Dollar before correcting slightly. President Trump’s tariff comments bolstered the USD, while investors awaited Canada’s December CPI data, expected to show a slight decline.
Outlook:
USD/CAD could face further upward momentum if Canada’s CPI figures come in weaker than expected, reinforcing dovish sentiment around the Bank of Canada. However, any signs of resilience in Canadian inflation may provide some support for the CAD.
AUD/USD
Summary:
The Australian Dollar retreated after strong performance in the previous session. Risk aversion rose following Trump’s tariff-related remarks, and speculation of rate cuts by the Reserve Bank of Australia weighed on the AUD.
Outlook:
AUD/USD may continue to struggle if risk sentiment remains subdued. Next week’s Australian inflation report could offer additional direction, with softer-than-expected figures likely to increase rate-cut expectations and pressure the AUD further.
USD/CHF
Summary:
The US Dollar held steady above 0.9050 against the Swiss Franc as investors responded to President Trump’s trade comments. The Swiss Franc weakened on expectations that the Swiss National Bank could continue reducing interest rates.
Outlook:
USD/CHF is expected to remain stable, with the Dollar benefitting from Trump’s policies and steady US interest rate expectations. The Franc may face additional headwinds as geopolitical tensions ease and safe-haven demand diminishes.
Final Summary:
Currency markets were heavily influenced by US President Trump’s tariff-related remarks, which boosted the Dollar against most major counterparts. Dovish expectations for central banks in Europe, the UK, Canada, and Australia kept their respective currencies under pressure. Looking ahead, economic data such as Canada’s CPI and Germany’s ZEW Survey, as well as broader geopolitical developments, will shape market movements in the coming days.