25/04/2025
Written by: Ian Morley
Daily Currency Update – 26th February 2025
GBPEUR
Summary: The Pound remained firm against the Euro, with GBPEUR holding near 1.2045. The Euro faced pressure following weak German consumer confidence data, which fell to -24.7 for March, below expectations. The European Central Bank is widely expected to cut interest rates next week, adding further downside risks for the Euro.
Outlook: The Euro may remain under pressure as traders position ahead of the ECB meeting. Any signals of further rate cuts could see GBPEUR drift higher. Meanwhile, UK Prime Minister Keir Starmer’s announcement of increased defence spending could provide some Sterling support, though economic uncertainty remains a factor.
GBPUSD
Summary: The Pound slipped to 1.2640 against the US Dollar as the Greenback rebounded. US Treasury yields recovered following the advancement of President Trump’s $4.5 trillion tax cut plan, boosting inflation expectations and limiting Fed rate cut bets. Meanwhile, Bank of England official Swati Dhingra suggested more than four rate cuts may be needed this year, which pressured Sterling.
Outlook: The upcoming US Durable Goods Orders and PCE inflation data will be key for market direction. A strong inflation reading could see further USD strength, weighing on GBP/USD. BoE expectations for rate cuts also remain a risk for the Pound.
EURUSD
Summary: EUR/USD briefly rose above 1.0500 but failed to hold gains. The Euro initially found support from optimism around Germany’s proposed €200 billion defence fund but fell as US Treasury yields climbed. Weak German consumer confidence data also weighed on the single currency.
Outlook: Traders will be closely watching inflation data from both the Eurozone and the US this week. If US yields continue to rise, EUR/USD could remain under pressure. Meanwhile, ECB policymakers are expected to signal another rate cut, which could keep the Euro weak.
USDCAD
Summary: USD/CAD climbed to 1.4330 as the US Dollar strengthened, and oil prices weakened. Trump confirmed that US tariffs on Canadian imports will go ahead, adding further pressure on the Canadian Dollar. The Bank of Canada remains on a more dovish policy path, which is limiting CAD upside.
Outlook: Oil price movements and further developments on US trade policy will be key for USD/CAD. If crude oil remains weak, CAD could struggle further. Meanwhile, any signs of a hawkish shift from the Fed could push USD/CAD higher.
AUDUSD
Summary: The Australian Dollar remains under pressure, trading below 0.6350. Weak CPI data from Australia showed inflation remains at 2.5%, slightly below expectations. Meanwhile, risk sentiment was hit by concerns over potential new US tariffs on China and semiconductor export restrictions.
Outlook: Risk-off sentiment and a strong USD could keep AUD under pressure. Any further developments in US-China trade tensions could weigh on the Aussie. Additionally, expectations of a Reserve Bank of Australia rate cut remain a headwind for the currency.
USDCHF
Summary: USD/CHF rebounded to 0.8950, recovering from a four-day losing streak. The US Dollar found support as the Fed maintained its cautious stance, and rising Treasury yields helped boost demand for the Greenback. However, weaker-than-expected US consumer confidence data kept gains limited.
Outlook: The Swiss Franc may continue to benefit from safe-haven demand amid geopolitical uncertainty. However, if US yields keep rising, USD/CHF could see further gains. The next key event will be the US PCE inflation report, which could drive market expectations for Fed policy.
Final Summary:
The US Dollar regained ground as Treasury yields rebounded, while weaker German data weighed on the Euro. The Pound remains under pressure due to dovish BoE comments, and the Canadian Dollar is struggling amid weak oil prices and trade concerns. The Australian Dollar remains under pressure from risk sentiment, while the Swiss Franc is holding steady on safe-haven demand. Key events ahead include US inflation data and central bank guidance, which will shape market direction.