April 2025 Foreign Exchange Market Review: Positioning Ahead of Policy Shifts

April 2025 was a transitional month for global currency markets, shaped more by anticipation of upcoming central bank meetings and ongoing economic data than by major policy changes. The pound, dollar, euro, and yen all responded to evolving inflation trends, growth signals, and global risk sentiment, with volatility driven by data releases and forward guidance rather than direct policy action.

British Pound (GBP)

The pound traded in a relatively narrow range in April, as the Bank of England did not hold a Monetary Policy Committee meeting during the month. Market participants focused on UK economic data, including inflation, labour market statistics, and retail sales. The latest CPI figures (for March, released in April) showed inflation falling to 2.6%, but the Bank of England and analysts projected a temporary rise later in the year due to energy price base effects. The labour market continued to show gradual loosening, with wage growth still elevated but expected to moderate.

With no policy action in April, attention turned to the Bank’s May meeting, where a rate cut was widely anticipated. The pound’s moves were mostly reactive to economic data and shifting expectations for the timing of monetary easing.

US Dollar (USD)

The US dollar’s performance in April was shaped by ongoing economic releases and the Federal Reserve’s established policy stance. The Fed did not meet in April, having last set policy in March and scheduled its next meeting for early May. Inflation data remained a focal point, with CPI and PPI releases suggesting that price pressures were easing but not yet fully tamed. Non-farm payrolls and retail sales data also influenced sentiment, with markets parsing each release for signs of economic resilience or slowdown.

The Fed’s cautious tone and commitment to data dependence contributed to a wait-and-see approach in markets, with the dollar moving in response to economic surprises and global risk sentiment rather than fresh policy signals.

Euro (EUR)

The euro was steady in April, consolidating gains from the European Central Bank’s March rate cut, which lowered the deposit rate to 2.5%. The ECB did not meet in April, and policymakers used public comments to reinforce a cautious but dovish outlook, with further rate cuts possible if inflation continued to ease. Eurozone inflation and PMI data released during April showed a gradual reduction in price pressures and modest improvement in business sentiment, but growth remained subdued.

Market focus was on the timing and pace of future ECB moves, with the next policy meeting scheduled for June. The euro responded mainly to data releases and shifts in global risk appetite.

Japanese Yen (JPY)

The yen experienced moderate volatility in April, reflecting shifts in global risk sentiment and domestic economic data. The Bank of Japan did not hold a policy meeting during the month and maintained its ultra-accommodative stance, emphasizing the need for sustained evidence of inflation before considering tightening. Japanese economic indicators, including machinery orders and inflation data, pointed to a steady but unspectacular recovery.

The yen’s trajectory was influenced by external factors, such as US economic data and global market sentiment, as well as domestic developments. Investors looked ahead to the Bank of Japan’s next policy review in May for potential signals of change.

Key Economic Events and Watchpoints for April

No major central bank policy meetings: The Bank of England, Federal Reserve, European Central Bank, and Bank of Japan all skipped policy meetings in April.

Major economic releases:

•   US: CPI, non-farm payrolls, retail sales, ISM indices

•   UK: Inflation (March data released in April), labour market statistics, retail sales

•   Eurozone: CPI, PMIs, industrial production

•   Japan: Inflation, machinery orders

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Geopolitical and trade developments: Markets continued to monitor US-UK trade discussions and global trade policy, but no major breakthroughs or disruptions occurred in April.

Market sentiment: Volatility was driven by data surprises and forward guidance from central bankers, not by new policy actions.

Outlook

April 2025 was a month of positioning and anticipation in the currency markets. With no major policy moves, attention was firmly on incoming data and the signals they provided for central bank actions in May and beyond. The pound, euro, and yen all traded in response to evolving inflation and growth trends, while the dollar’s path was shaped by expectations for the Federal Reserve’s next steps. Persistent uncertainty and data-driven volatility are likely to continue as markets await clearer direction from policymakers.