25/04/2025
Written by: Ian Morley
GBPEUR
Summary: The Pound weakened against the Euro following lower-than-expected UK inflation data. February’s CPI reading came in at 2.8% year-on-year, below the forecasted 2.9% and down from 3.0% in January. Core inflation also fell to 3.5%, reinforcing expectations that the Bank of England may cut rates in the coming months. Meanwhile, the Euro remains under pressure as markets anticipate further ECB rate cuts, with policymakers suggesting rates could drop to 2% by summer.
Outlook: The focus now turns to the UK Spring Statement later today, with potential fiscal policy adjustments that could impact GBP sentiment. Meanwhile, markets will monitor any updates from ECB officials regarding the timing of further rate cuts. If UK fiscal policy signals restraint, GBP could remain under pressure, while any dovish ECB signals may limit EUR gains.
GBPUSD
Summary: The Pound fell against the US Dollar, struggling to hold above 1.2950 after weaker UK inflation data. The US Dollar, meanwhile, remains supported despite weaker consumer confidence data, with markets focusing on upcoming US inflation readings.
Outlook: We will be watching the UK Spring Statement for potential market-moving announcements. On the US side, the focus remains on the Personal Consumption Expenditures (PCE) inflation data due on Friday, which could shape expectations for Federal Reserve policy. If inflation remains sticky, USD strength could persist.
EURUSD
Summary: The Euro remains under pressure, with EUR/USD trading below 1.0800 after a fifth consecutive daily decline. Dovish remarks from ECB policymakers suggest rate cuts could continue through the summer, keeping the Euro subdued. However, weak US consumer confidence data limited further downside for EUR/USD.
Outlook: Attention is on upcoming US data releases, particularly durable goods orders and PCE inflation. A weaker-than-expected inflation print could limit further USD gains, while continued signs of economic weakness in the Eurozone may keep the Euro under pressure.
USDCAD
Summary: USD/CAD trades near 1.4270, extending its recent losses. Reports suggest Canada may face lower-tier US tariffs in the upcoming trade measures, providing some support to the Canadian Dollar. Rising oil prices have also helped underpin CAD.
Outlook: Further developments regarding US tariffs on Canada will be key for CAD movement. Additionally, upcoming US economic data and Federal Reserve commentary will influence the USD side of the pair. If oil prices continue to strengthen, CAD may find further support.
AUDUSD
Summary: The Australian Dollar gained against the US Dollar, supported by rising copper prices following reports that the US may impose tariffs on copper imports. However, softer-than-expected Australian inflation data capped AUD gains.
Outlook: The key driver for AUD will be any further clarity on US trade policy and potential stimulus measures from China, which could support Australian exports. We will also watch upcoming US inflation data, which could impact overall USD sentiment.
USDCHF
Summary: USD/CHF rebounded to around 0.8840 after two days of losses. The US Dollar found support as market caution increased ahead of the upcoming US tariff announcement, while rising US Treasury yields also provided a boost.
Outlook: The Swiss Franc may see some safe-haven demand if geopolitical tensions escalate. However, a strong US Dollar could keep USD/CHF supported, especially if US inflation data reinforces expectations that the Federal Reserve will maintain higher interest rates for longer.
Final Summary: The Pound weakened against both the Euro and US Dollar after weaker UK inflation data, while markets await the UK Spring Statement for further direction. The Euro remains under pressure due to expectations of further ECB rate cuts, while the US Dollar holds firm ahead of key inflation data later this week. Commodity currencies saw mixed movements, with AUD benefiting from higher copper prices, while CAD was supported by rising oil prices and easing tariff concerns. Looking ahead, key drivers will be US inflation data and further developments in global trade policy.