Currency news / February 5, 2025

USD selling weakens as tariff fears ease

3 min read Thanim Islam

Thanim IslamFebruary 5, 2025

Market snapshot:

Markets wait to see if US-China trade tensions ease

Yesterday's currency recap

Yesterday, the USD saw a continued sell-off, mirroring the dip in yields, as December's job openings came in at 7.6 million, falling short of the anticipated 8 million. Despite the dip, the figures continue to reflect a healthy job market, and overall, they haven't significantly altered rate expectations.

Today's GBP rates

Currency pair	Daily move*	Indicative rate**
GBPAUD	-0.18%	1.9957
GBPCAD	-0.44%	1.7878
GBPCHF	-0.20%	1.1306
GBPDKK	-0.08%	8.9717
GBPEUR	-0.08%	1.2027
GBPJPY	0.17%	192.9180
GBPNOK	-0.63%	14.0326
GBPNZD	-0.05%	2.2098
GBPSEK	-0.60%	13.6936
GBPUSD	0.27%	1.2483

*Daily move - against G10rates at 7:30am, 05.02.25
** Indicative rates - interbank rates at 7:30am, 05.02.25

Key data points

Currency	Event	Period	Consensus	Previous
EUR	Services PMI	Jan Final	51.40%	51.40%
EUR	Composite PMI	Jan Final	50.20%	50.20%
GBP	Services PMI	Jan Final	51.20%	51.20%
GBP	Composite PMI	Jan Final	50.90%	50.90%
USD	Services PMI	Jan Final	52.50%	52.80%
USD	Composite PMI	Jan Final	52.50	52.40
USD	ADP Payrolls	Jan	150,000	122,000
USD	ISM Services PMI	Jan	54.00	54.10
USD	ISM Services New Orders	Jan		54.20
USD	ISM Services Employment	Jan		51.40

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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