25/04/2025
Written by: Ian Morley
Daily Currency Update – 24th February 2025
GBPEUR
Summary:
The Euro strengthened against the Pound at the start of the week following the results of the German election. Germany’s CDU/CSU party secured the largest share of the vote, creating expectations of a stable coalition government. Meanwhile, the Pound remained supported by stronger-than-expected UK retail sales, reducing the likelihood of an imminent Bank of England rate cut.
Outlook:
With the German election results now priced in, market focus will turn to upcoming Eurozone inflation data and the Bank of England’s policy stance. If UK economic data remains resilient, GBP could regain ground. However, any signs of weaker UK growth or dovish BoE comments could keep GBP/EUR deflated.
GBPUSD
Summary:
Sterling rose to near 1.2700 against the US Dollar, capitalising on renewed bets that the Federal Reserve may cut rates as early as June. A significant slowdown in US services sector activity has weakened the USD, with the Dollar Index (DXY) falling to its lowest level in nearly 12 weeks.
Outlook:
Traders will closely watch US economic data, particularly Durable Goods Orders and PCE inflation later this week. If these reports confirm a slowdown, USD weakness could persist, supporting GBP/USD. However, any rebound in US economic indicators may limit further gains for the Pound.
EURUSD
Summary:
The Euro gained against the US Dollar, with EUR/USD rising above 1.0480 after the German election outcome. Weaker-than-expected US economic data also contributed to USD weakness, keeping EUR/USD on an upward trajectory.
Outlook:
The Euro’s next move will depend on upcoming German and Eurozone economic data. If inflation remains under control, expectations for further ECB rate cuts could limit the Euro’s upside. Meanwhile, the USD remains vulnerable to any further signs of economic slowdown in the US.
USDCAD
Summary:
USD/CAD dropped below 1.4200 as weaker US economic data increased the likelihood of Fed rate cuts. The Canadian Dollar gained ground despite mixed domestic economic data, with concerns over inflation still keeping the Bank of Canada cautious.
Outlook:
The Loonie’s strength could be tested by weaker oil prices, particularly as Kurdistan is expected to resume crude exports. Traders will focus on Canadian economic indicators and any fresh comments from the BoC regarding future policy moves.
AUDUSD
Summary:
The Australian Dollar strengthened as the US Dollar came under pressure from expectations of Fed rate cuts. Market optimism about China’s economic policies also provided support for the AUD.
Outlook:
With the Reserve Bank of Australia’s recent rate cut still in focus, traders will look to economic data from China and Australia for further direction. Any signs of slowing growth in China could weigh on the AUD, while further USD weakness could offer additional support.
Final Summary:
The Euro gained ground following the German election results, while the US Dollar weakened due to disappointing economic data. Sterling remains supported by solid UK retail sales, while the Canadian Dollar and Australian Dollar both benefitted from USD weakness. This week, attention will turn to key US economic data, including Durable Goods Orders and PCE inflation, which could determine the next move for the major currency pairs.