01/10/2025
Written by: Ian Morley
Daily Currency Market Update – 19th June 2025
GBP/EUR
Summary: GBP/EUR trades near 1.1690 as markets await the Bank of England’s policy decision. The Pound remains under pressure following softer UK inflation data and expectations of a 7–2 vote split in favour of holding rates at 4.25%. Meanwhile, the Euro is supported by hawkish European Central Bank commentary, with President Lagarde stating that rate reductions are nearing an end.
Outlook: If the BoE signals a dovish outlook or hints at an August rate cut, Sterling could weaken further. ECB speeches later today may also influence EUR sentiment.
GBP/USD
Summary: GBP/USD slips toward 1.3400 as geopolitical tensions and safe-haven flows support the US Dollar. The Pound faces selling pressure ahead of the BoE’s announcement, while the Dollar benefits from reports that the US is preparing for a potential strike on Iran. The Fed held rates steady and maintained guidance for two cuts this year, but revised longer-term forecasts upward, citing inflation risks.
Outlook: Sterling’s direction will hinge on the BoE’s tone and any escalation in Middle East tensions. A dovish BoE and rising geopolitical risk could push GBP/USD lower.
EUR/USD
Summary: EUR/USD softens to around 1.1465 as risk aversion lifts the Dollar. The Euro remains under pressure despite hawkish ECB rhetoric, as traders await speeches from Lagarde, Nagel, and de Guindos. The Fed’s cautious stance and concerns over Trump’s tariff policies have added to market uncertainty.
Outlook: If ECB officials reinforce a pause in rate cuts, the Euro may stabilise. However, safe-haven demand for the Dollar could limit EUR/USD upside.
USD/AUD
Summary: AUD/USD declines after Australia’s Employment Change unexpectedly fell by 2.5K in May. The pair is also weighed down by heightened risk aversion following reports of potential US military action against Iran. The Fed’s decision to hold rates and maintain a cautious tone further supports the Greenback.
Outlook: The Aussie may remain under pressure if geopolitical tensions escalate. Domestic data and Chinese economic trends will also be key drivers.
USD/CAD
Summary: USD/CAD strengthens to around 1.3695 as the Fed’s steady policy stance and Middle East tensions support the Dollar. Oil prices remain elevated, offering some support to the Canadian Dollar, but safe-haven flows dominate.
Outlook: Crude oil trends and developments in the Israel-Iran conflict will shape USD/CAD. A dovish Fed tone could limit further Dollar gains.
USD/CHF
Summary: USD/CHF holds near 0.8200 after the Swiss National Bank cut its benchmark rate by 25 basis points to 0.00%. The Franc remains supported by safe-haven demand amid fears of US involvement in the Israel-Iran conflict. Switzerland’s trade surplus narrowed sharply in May, adding to CHF headwinds.
Outlook: If geopolitical risks intensify, CHF may remain firm despite SNB easing. The Dollar’s trajectory will depend on Fed guidance and risk sentiment.
Final Summary
Currency markets remain on edge as geopolitical tensions escalate and central banks hold steady. The Pound is under pressure ahead of the BoE’s decision, while the Euro is supported by hawkish ECB signals. The US Dollar benefits from safe-haven flows and cautious Fed guidance, weighing on risk-sensitive currencies like the Aussie and Loonie. The Swiss Franc remains resilient despite SNB easing, as investors seek shelter from rising Middle East risks. Traders will closely watch central bank commentary and geopolitical developments for further direction.