Dollar Still at Yearly Lows, Euro and Canadian Rate Decisions in Focus
GBP
GBP/USD is currently trading at 1.3181 (interbank), while GBP/EUR stands at 1.1559 (interbank), with the pair touching its weakest level against the Euro since late 2023.
Last week’s UK GDP figures surprised markets with a robust 0.5% expansion in February, the strongest monthly growth in almost a year, largely driven by a surge in manufacturing and solid gains across services. This upside surprise—fuelled in part by pre-tariff production activity—has led investors to scale back expectations of swift rate cuts from the Bank of England.
Over the weekend, BoE Monetary Policy Committee member Megan Greene noted that the inflationary impact of President Donald Trump’s new tariffs remains unclear, suggesting currency movements may play a larger role in transmission than anticipated.
This week, focus turns to labour and inflation data. While wage growth is expected to ease slightly, unemployment is forecast to remain steady.
Consumer Price Index figures due later in the week may show a softening of inflation, but new National Insurance hikes could reverse that trend in coming months if firms pass on costs to consumers.
No significant events are scheduled for today.
EUR
EUR/USD is trading at 1.1401 (interbank), maintaining gains from Friday’s rally and reaching a three-year high.
The euro has strengthened amid broader market optimism following President Trump’s decision to suspend new tariffs for 90 days, aimed at creating room for renewed negotiations.
The EU has responded in kind, pausing its own planned retaliatory measures to encourage constructive dialogue.
However, volatility remains a risk as markets digest Trump’s mixed signals, with only temporary exemptions offered so far. Meanwhile, the European Commission is said to be finalising a list of €18 billion in U.S. imports for targeted tariffs, should talks collapse.
This week, investors will monitor a heavy slate of Eurozone data, including ZEW economic sentiment tomorrow, industrial production figures, and the CPI report on Wednesday. Thursday’s ECB interest rate decision is expected to deliver a 25-basis-point cut, as policymakers contend with slowing growth and ongoing trade disruption.
No significant events are scheduled for today.
USD
The U.S. Dollar Index, which measures the U.S. dollar against a basket of six major currencies, 0.8% to 99.37, dipping to its lowest level since 2021 and losing favour as global investors turn defensive.
The dollar came under further pressure after President Trump imposed another wave of tariffs on Chinese semiconductors and hinted that the exemption on electronics may be short-lived. China responded with its own sweeping tariff hike, taking duties on American goods to 125%, fuelling fears of an all-out trade war.
Concerns are growing that the escalating dispute could trigger a recession in the U.S., with some analysts now pricing in as many as four interest rate cuts by the Federal Reserve before year-end.
Markets will be watching retail sales data closely this week, with forecasts calling for a 1.4% rise in March—an important gauge of consumer sentiment amid growing trade friction.
Two Fed speakers are due later today and could shed light on whether the central bank is prepared to shift policy more aggressively in response to weakening economic momentum.
Today’s Events (GMT+1):
18:00 - Fed Waller Speaks
23:00 - FOMC Member Harker Speaks
CAD
USD/CAD is trading at 1.3837 (interbank), its lowest level in five months, as investors pare back U.S. exposure and shift attention to this week’s Bank of Canada rate decision.
The BoC is facing one of its most challenging decisions in recent years, balancing domestic political uncertainty, volatile markets, and the unpredictability of U.S. trade policy. Governor Tiff Macklem has previously noted that conventional forecasting models are of limited use in the current environment and that the BoC must remain flexible.
A narrow split among analysts suggests the bank could either pause or deliver an eighth consecutive rate cut, with expectations that the policy rate could be trimmed to 2.5%.
Canada is set to release March’s inflation data tomorrow, marking the final key economic indicator before Wednesday’s rate decision. In February, the consumer price index rose 2.6% year-over-year, up from a 1.9% increase in January.
The latest Canadian wholesale sales data will be published today as a prelude to Wednesday’s crucial BoC decision.
Meanwhile, oil prices have risen this morning with Brent crude currently at $65.18 per barrel, while West Texas Intermediate crude (WTI) is currently at $61.91 per barrel.
Today’s Events (GMT+1):
13:30 - Wholesale Sales (Feb) – Forecast: 0.4%
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