06/02/2025
GBP/EUR
Summary:
GBP/EUR remains under pressure following disappointing UK PMI data for October. The UK Services PMI fell to 51.8, missing the forecast of 52.2, and the Manufacturing PMI also dropped to 50.3, down from 51.5 in September. This has weighed on the Pound, causing it to depreciate against the Euro. Meanwhile, the Eurozone’s manufacturing sector contraction eased as the Manufacturing PMI improved to 45.9, beating expectations of 45.1. However, the Eurozone Services PMI slipped to 51.2, a decline that reflects weaker performance in the sector.
Outlook:
The outlook for GBP/EUR is tilted towards the downside, especially with the UK’s underwhelming business activity data and expectations of potential rate cuts from the Bank of England. Key support for the pair is around 1.2048, and any further weakening of UK data could see the Euro gain ground. On the Euro side, if the ECB remains dovish or Eurozone data continues to show weakness, the Euro could face headwinds, limiting any significant gains.
EUR/USD
Summary:
EUR/USD has held above 1.0800 despite mixed Eurozone PMI data. The Manufacturing PMI improved to 45.9, the highest in five months, offering some relief to the Euro, while the Services PMI disappointed, slipping to 51.2. The US Dollar has shown some weakness, with US Treasury yields dipping and the Federal Reserve’s Beige Book reporting little change in economic activity across regions.
Outlook:
EUR/USD could remain range-bound in the near term, with the pair likely to test 1.0750 on the downside if US data comes in stronger or if Eurozone economic concerns persist. However, if the Fed signals a more dovish tone or if Eurozone data stabilises, the pair could move toward 1.0850-1.0900. US PMI data, due soon, will be a key indicator of whether the current Dollar weakness continues.
GBP/USD
Summary:
GBP/USD has faced renewed pressure, trading near 1.2960 after weaker-than-expected UK PMI figures. The manufacturing and services sectors both underperformed, heightening fears of a slowdown in UK economic activity. Meanwhile, the US Dollar has softened slightly due to a pullback in Treasury yields and mixed signals about the Federal Reserve’s next policy steps.
Outlook:
The Pound could continue to struggle against the Dollar unless UK economic data shows improvement. Any further weakness in UK figures, alongside growing speculation of a Bank of England rate cut, could push GBP/USD below the 1.2900 mark. On the other hand, a softer Fed stance and weaker US data could provide some support for the Pound, allowing the pair to move back towards 1.3000 in the near term.
AUD/USD
Summary:
AUD/USD has recovered from recent lows, climbing above 0.6600 as the US Dollar pulls back. Australia’s Judo Bank Services PMI inched up to 50.6, marking nine consecutive months of expansion, providing support for the Aussie. Additionally, the Reserve Bank of Australia’s hawkish tone and robust labour market data have bolstered the currency.
Outlook:
The pair may continue to benefit from positive domestic data in Australia and any signs of further easing from the Federal Reserve. However, risks remain tied to global market sentiment, and a stronger US Dollar could limit AUD/USD’s upside. The pair could test 0.6700 if risk appetite improves, while a decline towards 0.6550 is possible if US data strengthens and Treasury yields rise.
Final Summary:
The currency markets remain driven by central bank policy expectations and economic data. The Pound is under pressure from weaker-than-expected UK PMI data, while the Euro is buoyed by a modest recovery in manufacturing. The US Dollar has softened slightly amid mixed Fed signals and falling Treasury yields, while the Australian Dollar is supported by solid domestic data. Investors will closely monitor upcoming economic indicators to gauge the next move in key currency pairs.