25/04/2025
Written by: Ian Morley
Daily Currency Update – 27th February 2025
GBPEUR
Summary:
The Pound gained against the Euro on Wednesday, with GBP/EUR trading near 1.2090, as the Euro came under pressure following fresh tariff threats from US President Donald Trump. Trump confirmed plans to impose 25% tariffs on EU imports, including autos, which weighed heavily on sentiment around the single currency. The EU has vowed to respond firmly, raising concerns of a further escalation in trade tensions.
Meanwhile, Bank of England (BoE) member Swati Dhingra reiterated her view that the BoE could need to cut rates more aggressively than the market currently expects, citing the need to address external trade-related supply shocks.
Outlook:
With Trump’s tariff plans now extending to the EU, the Euro is likely to remain under pressure, particularly if the EU retaliates with its own trade measures. Markets will also be watching the European Commission’s economic sentiment data today for further clues on the health of the Eurozone economy. For Sterling, attention will shift to the meeting between UK Prime Minister Keir Starmer and President Trump later today, where trade relations between the UK and US are expected to be discussed.
GBPUSD
Summary:
The Pound slipped against the US Dollar on Wednesday, falling towards 1.2650 as risk-off sentiment dominated following Trump’s announcement on tariffs targeting the EU, Canada, and Mexico. Investors sought safe-haven assets, benefiting the US Dollar.
Domestically, there is caution ahead of Starmer’s meeting with Trump, which could be crucial for future UK-US trade relations. Comments from BoE’s Swati Dhingra, who continues to favour more aggressive rate cuts, also weighed on the Pound.
Outlook:
GBP/USD will likely be influenced by the Trump-Starmer press conference today, where any hints of favourable trade terms could support Sterling. However, ongoing global trade uncertainty and potential further US tariff announcements could favour the Dollar in the short term. Markets will also watch US data releases today, including GDP revisions and Durable Goods Orders, for additional Dollar direction.
EURUSD
Summary:
The Euro remained under pressure against the US Dollar, trading near 1.0465 after Trump confirmed his intention to impose 25% tariffs on EU imports. The threat of retaliatory tariffs from the EU added to concerns about the region’s economic outlook, already hampered by slowing growth and weak consumer sentiment data.
Outlook:
The Euro is likely to stay on the back foot, with the risk of escalating trade tensions between the US and EU hanging over the market. Traders will also monitor US economic data releases today, which could provide the next catalyst for the USD. Any weaker-than-expected data could provide a slight reprieve for EUR/USD, though the broader trend remains bearish.
USDCAD
Summary:
The Canadian Dollar weakened against the US Dollar, with USD/CAD rising towards 1.4340. Lower oil prices, driven by optimism around a potential peace deal between Russia and Ukraine, weighed on the commodity-linked CAD.
Further pressure came from Trump’s confirmation that 25% tariffs on Canadian goods and 10% on energy exports will take effect from 2nd April. This ongoing trade uncertainty continues to drag on sentiment for the Loonie.
Outlook:
With oil prices under pressure and US tariffs on Canadian exports looming, CAD is likely to struggle. Today’s US data releases, including GDP and Durable Goods Orders, could drive further USD moves. Any particularly strong data could push USD/CAD higher, while a risk-on shift could offer CAD some relief.
AUDUSD
Summary:
The Australian Dollar extended its losing streak, with AUD/USD under pressure near recent lows. Poor Private Capital Expenditure data, showing a surprise 0.2% contraction in Q4, added to the bearish sentiment.
Additionally, renewed risk aversion following Trump’s tariff threats and broader concerns about slowing global trade weighed heavily on the Aussie.
Outlook:
AUD remains vulnerable to further declines, particularly if global trade tensions escalate further. Traders will also be keeping a close eye on Chinese developments, given Australia’s strong trade links, as well as US economic data later today. Without a clear shift in sentiment, AUD/USD is likely to remain under pressure.
USDCHF
Summary:
The US Dollar strengthened slightly against the Swiss Franc, with USD/CHF trading near 0.8970. Global economic uncertainty and Trump’s escalating trade war rhetoric supported safe-haven demand for the Franc, limiting the pair’s upside.
Outlook:
The next driver for USD/CHF will likely come from US economic data, particularly the Q4 GDP revision. If the data comes in stronger than expected, USD/CHF could push higher. However, any worsening in global trade tensions or geopolitical developments could see safe-haven flows favouring the Franc.
Final Summary:
Global markets remain on edge, with Trump’s aggressive tariff stance driving risk aversion and weighing on currencies like the Euro, Canadian Dollar, and Australian Dollar. The US Dollar is holding firm, supported by its safe-haven appeal. Meanwhile, the Pound faces a key moment with Prime Minister Starmer’s meeting with Trump today, which could shape UK-US trade relations going forward. Markets will also be closely watching today’s US economic data for further clues on the outlook for Federal Reserve policy.