25/04/2025
Written by: Ian Morley
GBP/EUR
Summary:
GBP has strengthened slightly despite weaker-than-expected PMI results and mounting UK debt concerns. The Chancellor, Rachel Reeves, has announced potential new borrowing measures, welcomed by the IMF, though they caution the UK needs to stabilise its record-high debt levels.
Outlook:
With the upcoming budget and potential gilt market reactions, GBP faces some downside risk. However, Bank of England’s hawkish stance on interest rates and stable business activity in the UK could provide near-term support.
GBP/USD
Summary:
The GBP/USD pair regained ground, climbing to near 1.2970 on Thursday. This came as the USD softened slightly due to falling Treasury yields, despite the currency’s recent bullish sentiment based on economic resilience in the U.S. and speculation around the upcoming U.S. presidential election.
Outlook:
Although GBP may find some temporary strength, traders remain cautious as the UK budget approaches. U.S. fundamentals, such as Durable Goods Orders and election implications, will continue to influence this pair.
EUR/USD
Summary:
EUR/USD ticked higher as the USD retreated on softer Treasury yields, with the Euro benefitting from a positive German IFO Business Climate Index. However, the pair remained under pressure due to expectations of more aggressive ECB rate cuts, especially as Eurozone inflation continues to fall.
Outlook:
EUR’s upward potential may be limited, with USD resilience expected amid ongoing U.S. rate expectations. A soft economic outlook in the Eurozone may prompt further ECB easing, capping the Euro’s strength.
AUD/USD
Summary:
The Australian Dollar edged lower as the USD stabilised, despite the hawkish tone from the Reserve Bank of Australia (RBA). The AUD suffered from global caution and slight weakness in the commodity sector.
Outlook:
With U.S. Durable Goods Orders data and sentiment around Fed rate adjustments looming, AUD may face further short-term pressures. However, Australia’s steady economic indicators may provide some stability.
Final Summary:
As we close the week, GBP maintains slight upward momentum but faces considerable risk from domestic fiscal policies. USD holds strong in the face of anticipated U.S. rate adjustments and election implications. EUR remains cautious, restrained by economic forecasts, while AUD remains susceptible to USD strength amid global economic fluctuations.