06/02/2025
GBP/EUR
Summary:
GBP/EUR showed some upward momentum as the Pound gained strength ahead of the UK Autumn Budget release. This anticipated budget has caused limited risk premiums, implying that investors expect a measured, growth-friendly approach with minimal market disruption. Meanwhile, German GDP figures showed a surprising 0.2% quarterly growth, boosting the Euro and easing expectations of an aggressive ECB rate cut in December.
Outlook:
The UK’s Autumn Budget is a potential GBP driver. If the budget includes pro-growth initiatives, we may see GBP strengthen. However, a cautious or neutral budget is expected, which could limit volatility. For the Euro, investors await Eurozone GDP data and further inflation insights, as robust numbers may strengthen EUR. Additionally, ongoing US election uncertainty and potential global trade policies could impact both GBP and EUR, especially if Trump’s tariff plans materialise.
EUR/USD
Summary:
EUR/USD gained traction after upbeat German Q3 GDP growth and unexpected inflation data from Germany. The recent decline in US JOLTS job openings and tempered ADP payroll expectations reflect a softer labour market, weighing on USD as investors speculate on upcoming GDP and job data.
Outlook:
A positive GDP surprise from Germany combined with upcoming Eurozone GDP data could bolster EUR, while an anticipated US Q3 GDP slowdown may continue to challenge USD. Markets are closely watching for Friday’s non-farm payrolls report, which may influence the Fed’s rate outlook. Political uncertainty surrounding the US election is an additional factor, with a Trump victory likely triggering economic shifts that may impact the EUR/USD balance.
GBP/USD
Summary:
GBP/USD saw mild gains as the UK Budget raised hopes for a stable economic outlook, alongside general USD weakening due to a softer JOLTS report and lower Treasury yields. Despite its recent upward trend, GBP/USD remains below key resistance levels.
Outlook:
The pair may experience additional upward pressure if the UK Budget incorporates pro-growth policies. However, USD sentiment is contingent on upcoming US GDP and employment data. Any economic surprises could tilt GBP/USD volatility, especially as the Fed’s policy stance evolves based on US labour market resilience.
AUD/USD
Summary:
AUD/USD rebounded from a recent low as the Australian CPI reported marginally below expectations, reducing hopes of a near-term RBA rate cut. Modest USD weakness supported AUD, though broad risk-aversion in markets capped gains.
Outlook:
The AUD/USD pair’s path will hinge on US macro data, with weak numbers possibly extending support for AUD. The upcoming US GDP and payroll data are critical, and any risk-off sentiment driven by election uncertainty could favour the USD as a safe haven. On the AUD side, potential domestic economic improvements may strengthen the pair, but resistance remains in place near the 0.6630 mark.
Final Summary:
Overall, currency markets are closely tied to political and economic developments. The UK Budget will likely play a key role in GBP performance, while the ECB’s outlook remains sensitive to European GDP and inflation data. USD is facing pressure from weak labour indicators, with the focus now shifting to US GDP and payroll updates. As always, upcoming geopolitical events, especially the US presidential election, may add volatility to major pairs.