25/04/2025
Written by: Ian Morley
Daily Currency Update – 27th March 2025
GBPEUR
Summary: The pound saw a slight recovery against the euro today after UK inflation data came in higher than expected, reinforcing expectations that the Bank of England may hold off on interest rate cuts for longer. Meanwhile, the euro remained under pressure as weak German business sentiment data weighed on the single currency.
Outlook: With inflation remaining a concern, sterling may continue to find support in the short term, particularly if BoE policymakers adopt a more hawkish tone. However, any signs of economic slowdown in the UK could limit gains. For the euro, market focus will remain on upcoming Eurozone inflation figures and ECB commentary.
EURUSD
Summary: The euro struggled against the dollar as US consumer confidence data came in stronger than expected, reinforcing the Fed’s cautious approach towards rate cuts. The dollar benefitted from continued safe-haven demand amid geopolitical tensions.
Outlook: The key event for this pair will be upcoming US GDP and PCE inflation data, which could provide further clues on Fed policy. If US economic data remains strong, the dollar could maintain its strength against the euro.
GBPUSD
Summary: Sterling edged higher against the dollar but remained within recent ranges as traders awaited further economic data from both the UK and US. The Fed’s cautious stance has kept the dollar well-supported, but UK inflation concerns have helped underpin the pound.
Outlook: The direction of GBPUSD will likely depend on upcoming US growth and inflation data. If US data surprises to the upside, we could see further dollar strength. On the UK side, BoE rhetoric will be closely monitored for clues on rate policy.
USDAUD
Summary: The US dollar gained ground against the Australian dollar as risk sentiment waned and commodity prices softened. Stronger-than-expected US economic data has reinforced the Fed’s patient stance on rate cuts, keeping the greenback in demand.
Outlook: The next key focus will be Australian inflation data and US growth figures. If risk aversion persists, the USD may continue to outperform the AUD in the short term.
USDCAD
Summary: The US dollar moved higher against the Canadian dollar as oil prices retreated, weighing on the commodity-linked Loonie. Strong US data also provided additional support for the greenback.
Outlook: Canada’s GDP data later this week will be a key driver for the pair. If growth disappoints, the CAD could see further losses, particularly if US data remains strong.
USDCHF
Summary: The Swiss franc weakened slightly against the US dollar as risk sentiment favoured the greenback. The SNB’s recent dovish stance has also kept the CHF under pressure.
Outlook: Market focus will remain on upcoming US data releases, with any signs of persistent inflation likely to support the USD. Meanwhile, geopolitical developments could drive safe-haven flows, impacting USDCHF movement.
Final Summary: Today’s market movements have largely been dictated by central bank expectations and economic data. The pound remains supported by sticky inflation, while the euro struggles with weak sentiment. The dollar is holding firm as strong US data continues to back the Fed’s cautious approach. Looking ahead, key economic releases from both sides of the Atlantic will dictate short-term direction.