Currency news / March 28, 2025

Markets remain nervous going into Independence Day

3 min read Thanim Islam

Thanim IslamMarch 28, 2025

Market snapshot:

US GDP surprises to the upside
EUR dips as market anticipates further rate cuts

Yesterday's currency recap

Yesterday, following US corporate profits' biggest surge in over 2 years (of 5.9%), the third US GDP estimate came in at 2.4% - higher than the previous estimate of 2.3%.

However, despite this positive momentum, going into the 4pm fix, USD experienced a sell-off. A key factor behind this shift was a Deutsche Bank report highlighting concerns over the Fed's commitment to sustaining dollar liquidity, particularly with major allies.- This uncertainty could potentially accelerate other countries' efforts to reduce their dependence on the US financial system, especially because of doubts over the future reliability of USD swap lines. It is worth noting, however, that the sell-off was very short-lived.

GBP had a better day following the sell-off on Wednesday. However, this was more to do with market positioning than anything else. Some traders are speculating that should the Chancellor opt for a tax hike this Autumn, then markets might be significantly underpricing rate cut expectations by the BoE for the year.

Today's GBP rates

Currency pair	Daily move*	Indicative rate**
GBPAUD	0.41%	2.0541
GBPCAD	0.85%	1.8542
GBPCHF	0.30%	1.1425
GBPDKK	0.15%	8.9571
GBPEUR	0.15%	1.2005
GBPJPY	0.89%	195.7730
GBPNOK	-0.02%	13.6058
GBPNZD	0.28%	2.2552
GBPSEK	0.10%	12.9729
GBPUSD	0.54%	1.2957

*Daily move - against G10 rates at 7:30am, 28.03.25
** Indicative rates - interbank rates at 7:30am, 28.03.25

Key data points

Currency	Event	Period	Consensus	Previous
EUR	Consumer Confidence	Mar		-14.50
EUR	Economic Confidence	Mar	96.70	96.30

What we think

UK retail sales data this morning has shown that sales have risen strongly since the start of 2025, with a 1% increase in February, and a 1.4% surge in January. The data suggests that households are starting to spend their savings, with disposable incomes per head rising 1.7% in Q4 of 2024. GBP got a brief jump on the numbers.

The latest French and Spanish CPI figures fell short of forecasts, prompting markets to anticipate an 60 basis points in further ECB rate cuts this year. We started the week with markets only pricing in 50bp. As a result, the EUR remains on the backfoot to end the week.

Quiet day ahead with markets waiting to see what happens on 2nd April with Trump's ‘Liberation Day’. We expect trading to end the week within the weekly ranges.

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