Currency news / March 6, 2025

Will the ECB back the market?

3 min read Thanim Islam

Thanim IslamMarch 6, 2025

Market snapshot:

Markets expect two rate cuts from the ECB this year
GBPUSD and EURUSD hit 4 month highs

Yesterday's currency recap

The early morning moves continued throughout yesterday afternoon, with EUR the biggest winner of the day on account of Germany’s plans to boost defence spending. This resulted in markets reducing the odds of three further rate cuts by the European Central Bank (ECB) this year.

USD losses also continued as markets weighed up the growth risks of tariffs on the US economy, seeing markets at one point put a 20% chance on four rate cuts by the Federal Reserve (Fed) this year, before settling on only three. ISM Services in the afternoon came in higher than expected but did little to slow down USD’s decline.

Today's GBP rates

Currency pair	Daily move*	Indicative rate**
GBPAUD	0.00%	2.0401
GBPCAD	0.35%	1.8523
GBPCHF	0.60%	1.1429
GBPDKK	-0.80%	8.9101
GBPEUR	-0.80%	1.1946
GBPJPY	-0.12%	191.042
GBPNOK	-0.65%	14.1068
GBPNZD	-0.22%	2.2554
GBPSEK	-1.15%	13.1744
GBPUSD	0.50%	1.2863

*Daily move - against G10 rates at 7:30am, 06.03.25
** Indicative rates - interbank rates at 7:30am, 06.03.25

Key data points

Currency	Event	Period	Consensus	Previous
EUR	Retail Sales MoM	Jan	0.10%	-0.20%
EUR	Retail Sales YoY	Jan	2.00%	1.90%
EUR	ECB Meeting	Mar	2.50%	2.75%
USD	Initial Jobless Claims	Mar 1st	233,000	242,000

Speeches

EUR: ECB Lagarde
GBP: BoE Mann
USD: Fed Waller, Harker

What we think

Markets are widely expecting the ECB to cut by 0.25%, which we don’t anticipate prompting much volatility, so focus will fall on the statement from Christine Lagarde. Anything to add to the recent upturn in economic fortunes could see markets reduce the chances of a third rate cut this year and thus provide further support for EUR.

From a technical charting perspective, both GBPUSD and EURUSD traded above the 200-day moving average, on top of looking overbought relative to recent ranges – so the question now is: are we getting near the top of the recent moves on these pairs? We feel it will need strong data from the US to realise this, putting tomorrow's non-farm payroll number under the market's microscope.

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