02/10/2025
Written by: Ian Morley
Daily Currency Update – 25th April 2025
GBPEUR
Summary:
The pound rallied to 1.1720 in early Friday trading after stronger-than-expected UK retail sales data lifted sentiment. Retail sales for March rose 0.4% month-on-month, surpassing expectations of a 0.4% decline. On an annual basis, sales jumped 2.6%. Meanwhile, the euro struggled following dovish comments from ECB officials, who opened the door to potentially larger interest rate cuts due to persistent trade uncertainty and weakening growth prospects.
Outlook:
While upbeat UK data has offered the pound near-term support, downside risks persist due to ongoing trade policy uncertainty. Any clarity or breakthroughs in US-UK trade talks could lift sterling further. However, with the ECB leaning towards easing and the BoE expected to follow suit in May, rate differentials may limit volatility in the pair over the medium term.
EURUSD
Summary:
The euro came under pressure overnight, slipping below 1.1400 after comments from ECB officials reinforced expectations of a rate cut in June. Meanwhile, the dollar recovered some ground following renewed hopes for a resolution in US-China trade tensions, with reports suggesting Beijing may suspend some tariffs.
Outlook:
Further direction for EURUSD will hinge on developments in trade talks and key data out of the US, including consumer sentiment. If sentiment toward US growth improves, the dollar could edge higher. However, persistent trade friction and dovish Fed expectations may limit any meaningful dollar strength.
GBPUSD
Summary:
Despite upbeat retail data, sterling dipped slightly against the dollar on Friday, slipping to around 1.3300. The move reflected the broader dollar rebound on hopes of easing US-China trade tensions and increased optimism over the global trade environment.
Outlook:
With the BoE still expected to cut rates in May, sterling may struggle to break higher unless supported by further UK economic outperformance or progress on a trade deal with the US. Markets will closely watch any headlines from today’s scheduled US-UK trade meeting.
USDAUD
Summary:
AUD/USD is consolidating after a two-day rally, trading near 0.6400. The pair initially benefited from speculation that China may ease tariffs on US goods. However, mixed sentiment and uncertainty surrounding the outcome of US-China talks have capped gains.
Outlook:
The Aussie remains vulnerable to broader shifts in global trade sentiment. If talks stall or headlines turn more negative, AUD could come under renewed pressure, particularly with the RBA expected to cut rates at its next meeting.
USDCAD
Summary:
The Loonie has weakened modestly, with USD/CAD holding above 1.3850. Support for the dollar has come from optimism around potential US trade deals, but Canadian dollar sentiment was hit after Trump hinted at higher tariffs on Canadian auto imports.
Outlook:
Trade headlines will remain a key driver, particularly any updates on Canada’s negotiations with the US. Persistent uncertainty and weaker oil prices may keep the Canadian dollar on the back foot in the near term.
USDCHF
Summary:
USD/CHF is holding above 0.8300 after rebounding on Thursday. Optimism about progress in US-China negotiations helped the dollar recover, though safe-haven demand has kept the franc firm.
Outlook:
While trade optimism could support the USD, safe-haven flows into the franc are likely to persist due to ongoing global uncertainty. Intervention by the SNB remains a potential wildcard if CHF strength threatens price stability.
Final Summary:
Stronger UK retail data has provided a boost to the pound, though gains have been capped by trade-related uncertainty. The euro is under pressure as ECB officials hint at more aggressive easing, while the dollar has rebounded on trade optimism. Risk-sensitive currencies like AUD and CAD remain cautious, and safe-haven flows continue to support the Swiss franc. With trade policy at the forefront, markets remain sensitive to political developments and central bank signals.