Currency news / January 24, 2025

USD softens on Trump talk

3 min read Thanim Islam

Thanim IslamJanuary 24, 2025

Market snapshot:

Trump pushes for rate cuts and softens tariff threat on China
EUR gaining as markets trim rate cut expectations

Yesterday's currency recap

Yesterday, Donald Trump captured the market's attention with two main points.

Firstly, he announced his plan to engage in discussions with Federal Reserve (Fed) Chair Jerome Powell, advocating for interest rate reductions to alleviate the financial burden on American households.

And secondly, he told Fox News that his preference is to not have to impose tariffs on China, stating that he already has had “good, friendly” talks with Xi Ping. The softening of USD is continuing as a result.

Today's GBP rates

Currency pair	Daily move*	Indicative rate**
GBPAUD	0.10%	1.9648
GBPCAD	0.14%	1.7730
GBPCHF	0.36%	1.1207
GBPDKK	0.18%	8.8433
GBPEUR	0.18%	1.1853
GBPJPY	-0.02%	192.7320
GBPNOK	0.18%	13.9162
GBPNZD	0.10%	2.1763
GBPSEK	0.24%	13.5876
GBPUSD	0.20%	1.2351

*Daily move - against G10rates at 7:30am, 24.01.25
** Indicative rates - interbank rates at 7:30am, 24.01.25

Key data points

Currency	Event	Period	Consensus	Previous
EUR	Manufacturing PMI	Jan	45.40	45.10
EUR	Services PMI	Jan	51.50	51.60
EUR	Composite PMI	Jan	49.70	49.60
GBP	Manufacturing PMI	Jan	47.00	47.00
GBP	Services PMI	Jan	50.80	51.10
GBP	Composite PMI	Jan	50.10	50.40
USD	Manufacturing PMI	Jan	49.85	49.40
USD	Services PMI	Jan	56.50	56.80
USD	Composite PMI	Jan	55.60	55.40

What we think

The EUR is finishing the week on a high note with the release of EU and German PMIs coming in stronger than expected.

Whilst markets are widely expecting a 25bp rate cut in next week's European Central Bank (ECB) meeting there are whispers that, due to inflation concerns resurfacing, markets may well start to trim rate cut expectations. In addition, an improved economic outlook will further strengthen expectations for a trim in rate cut forecasts.

UK and US PMIs are out today but the overriding theme seems likely be a continued softening of USD in light of Trump's comments last night.

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