Currency news / February 4, 2025

Rollercoaster ride for USD

3 min read Thanim Islam

Thanim IslamFebruary 4, 2025

Market snapshot:

Canada and Mexico tariffs delayed for one month
USD reverses gains as a result

Yesterday's currency recap

It's never a dull day with Donald Trump and his tariffs. We started the week with USD on the front foot, following the Trump administration imposing tariffs on Canada, Mexico and China. However, those gains were pared after an agreement was reached that tariffs on Mexico and Canada would be delayed by one month.

GBPUSD finished the day marginally higher. With the UK being predominantly a service-led economy, and thus less exposed to tariffs, GBP emerged as somewhat of a “safe-haven” for markets and well performing ahead of the Bank of England's (BoE) meeting on Thursday.

On the data front, stateside ISM manufacturing PMIs came in much better than expected, with the sector seeing expansion since October 2022.

Today's GBP rates

Currency pair	Daily move*	Indicative rate**
GBPAUD	0.60%	2.0058
GBPCAD	0.40%	1.8089
GBPCHF	0.25%	1.1324
GBPDKK	0.80%	8.9945
GBPEUR	0.80%	1.2055
GBPJPY	-0.42%	191.7120
GBPNOK	0.80%	14.1493
GBPNZD	0.70%	2.2173
GBPSEK	0.47%	13.8193
GBPUSD	0.01%	1.2402

*Daily move - against G10rates at 7:30am, 04.02.25
** Indicative rates - interbank rates at 7:30am, 04.02.25

Key data points

Currency	Event	Period	Consensus	Previous
USD	JOLTS Job Opening	Dec	8,000,000	8,098,000

What we think

China has responded to Trump's tariffs by announcing a probe into Google and new tariffs on US products this morning, seeing the USD marginally stronger this morning on some risk aversion. However, should we see the US and China move towards a de-escalation of trade tensions there could be a further correction on USD. But we must remember tariffs are not totally off the table and we expect FX volatility to remain relatively high over the coming months. Today, markets only have the US JOLTS numbers to focus on.

GBP enjoyed a good day on its “tariff-haven” status, but we still see the Bank of England's meeting on Thursday as a risk event for the currency and any dovish tones from the bank will add to rate cut bets thus potentially causing GBP to weaken.

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