02/10/2025
Written by: Ian Morley
GBPEUR
Summary:
The pound climbed against the euro in early Wednesday trading, reaching near 1.1690, supported by renewed optimism around US-UK trade negotiations. Meanwhile, dovish comments from European Central Bank officials continued to weigh on the euro. Market participants are anticipating a rate cut from the ECB in June, with odds now priced at 75%.
Outlook:
Upcoming PMI releases from both the UK and Eurozone could be key in determining short-term direction. While the UK’s limited exposure to US tariffs supports the pound, any disappointing PMI figures or signs of slowing UK economic momentum may cap further gains.
EURUSD
Summary:
EUR/USD came under renewed pressure, falling towards 1.1350 amid a rebound in US dollar strength. The dollar was buoyed by easing fears around Fed Chair Powell’s potential dismissal and positive signals from ongoing US trade negotiations.
Outlook:
The pair’s direction hinges on today’s Eurozone and US PMI data. While expectations of ECB rate cuts continue to weigh on the euro, a weaker-than-expected US PMI release could limit the dollar’s upside.
GBPUSD
Summary:
The pound slipped against the US dollar on Tuesday, falling below 1.3250 before rebounding back above 1.3300 early Wednesday. The decline followed uncertainty around global trade policy and soft UK data expectations.
Outlook:
Traders are eyeing UK PMI results and the evolving tone of US-China trade talks. The pound could come under renewed pressure if UK data disappoints or if Trump’s tariff negotiations deteriorate, reviving global growth concerns.
USDAUD
Summary:
The Australian dollar staged a mild recovery after earlier losses, supported by upbeat domestic PMI figures showing growth in both manufacturing and services. However, the AUD remains vulnerable to broader risk sentiment and dollar moves.
Outlook:
Market sentiment could shift again depending on further developments in US-China trade talks. A more dovish Fed tone or de-escalation of trade tensions would support AUD, while renewed uncertainty or weak Chinese demand could weigh on the currency.
USDCAD
Summary:
USD/CAD rose on Wednesday to trade near 1.3830, supported by a stronger US dollar. However, rising oil prices helped limit the Loonie’s downside, with sanctions on Iran and falling US crude stockpiles providing support.
Outlook:
The pair’s near-term trajectory will be influenced by Friday’s Canadian Retail Sales data. If oil prices continue to rise and Canadian data surprises to the upside, CAD could regain some ground.
USDCHF
Summary:
The dollar reversed losses against the Swiss franc, climbing over 1% to 0.8181. Market optimism over progress in US trade negotiations helped lift USD, although concerns about the Fed’s independence remain.
Outlook:
USDCHF could face renewed volatility if tensions around the Fed re-emerge. For now, trade optimism supports the dollar, but the franc may find safe-haven support if uncertainty intensifies again.
Final Summary:
The US dollar is attempting a recovery after earlier weakness, driven by calming political tensions and trade optimism. The pound has gained ground, especially against the euro, although upcoming PMI figures will be key. The euro is under pressure as markets increase bets on further ECB rate cuts. Risk sentiment remains fragile, we will closely monitor central bank communications and economic data for further cues.