Currency news / March 5, 2025

GBPUSD at 4-month highs

3 min read Thanim Islam

Thanim IslamMarch 5, 2025

Market snapshot:

USD under pressure as growth outlook sours
Lutnick hints at tariff compromise

Yesterday's currency recap

USD-selling continued unabated yesterday, as markets added to wagers that the Federal Reserve (Fed) could actually cut interest rates more than previously expected. In light of recent concerns over the US economy, markets are now pricing in three rate cuts this year, up from two rate cuts expected only a week ago and the next rate cut is now expected in June, rather than September.

Read more about the Fed's interest rate decisions here - When is the next Fed interest rate decision?

EUR drew support from Germany's announcement that it will amend its constitution to exempt defence spending from limits on fiscal spending, in addition to setting up a EUR500bn infrastructure fund. The improved growth outlook in the region now means markets are no longer pricing in three further rate cuts by the European Central Bank (ECB) this year.

On the tariff front, US Commerce Secretary Howard Lutnick hinted at a compromise with Canada, Mexico and China, allaying fears heightened over the last few days.

Today's GBP rates

Currency pair	Daily move*	Indicative rate**
GBPAUD	0.46%	2.0498
GBPCAD	0.27%	1.8445
GBPCHF	-0.63%	1.1319
GBPDKK	-0.26%	9.0094
GBPEUR	-0.26%	1.2078
GBPJPY	-0.50%	188.906
GBPNOK	0.22%	14.2477
GBPNZD	0.13%	2.2645
GBPSEK	0.32%	13.393
GBPUSD	0.14%	1.2721

*Daily move - against G10 rates at 7:30am, 05.03.25
** Indicative rates - interbank rates at 7:30am, 05.03.25

Key data points

Currency	Event	Period	Consensus	Previous
EUR	PPI MoM	Jan	0.30%	0.40%
EUR	PPI YoY	Jan	1.30%	0.00%
USD	ADP Employment Change	Feb	140,000	183,000
USD	ISM Services	Feb	52.50	52.80

What we think

USD could come under further pressure this afternoon should the services and ADP payroll numbers disappoint, especially given the recent sensitivity of USD to weaker data. Markets are expecting softer numbers than January already but an even weaker set of numbers could see both GBPUSD and EURUSD extend recent gains – both currently trading at four-month highs. EUR is extending gains following on from the news out of Germany yesterday.

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