01/10/2025
Written by: Ian Morley
Daily Currency Market Update – 20th June 2025
GBP/EUR
Summary: GBP/EUR remains under pressure around 1.1700 as risk sentiment deteriorates following sharp declines in UK Retail Sales. Retail activity dropped 2.7% month-on-month in May—far worse than expected—triggering concerns over the UK’s domestic demand outlook. Meanwhile, the Euro is finding support from hawkish European Central Bank rhetoric, with ECB President Lagarde reaffirming that the bank is “in a good position” to navigate uncertainty, suggesting that rate cuts may soon come to an end.
Outlook: Market focus turns to Eurozone consumer sentiment data and ECB commentary later today. A weaker Eurozone outlook could stabilise GBP/EUR, but ongoing risk aversion may keep the Pound vulnerable.
GBP/USD
Summary: GBP/USD trades below 1.3500 after a volatile session. Sterling came under renewed selling pressure following the weak UK retail print, while safe-haven demand for the Dollar was reinforced by Middle East tensions. Reports suggest President Trump may postpone a final decision on a military strike against Iran for up to two weeks, helping to ease panic—but uncertainty remains elevated.
Outlook: Sentiment will hinge on geopolitical headlines and upcoming Fed commentary. If Trump maintains a diplomatic approach and risk appetite improves, GBP/USD could rebound modestly.
EUR/USD
Summary: EUR/USD is back above 1.1500, gaining ground for a third straight day. The Dollar softened as Trump signalled a delay in deciding on military action, reducing safe-haven demand. That said, the pair remains below recent highs as investors remain cautious about sustained Euro strength, especially given geopolitical risks and fragile Eurozone trade relations with the US.
Outlook: Eurozone Consumer Confidence and economic bulletin releases will guide near-term direction. Any signals of strain in economic activity could cap further Euro gains.
USD/AUD
Summary: AUD/USD remains firm near 0.6520, supported by stable Chinese policy and an easing of USD demand. The People’s Bank of China held its loan prime rates steady, while China’s May Retail Sales surprised to the upside at 6.4% YoY. Still, upside for the Aussie is limited by soft domestic jobs data and market anxiety around broader geopolitical risks.
Outlook: Traders are watching developments in US foreign policy as well as China’s diplomatic engagement on the Iran issue. Further signs of regional de-escalation could lift AUD/USD.
USD/CAD
Summary: USD/CAD edged lower to around 1.3695 as crude oil prices found some stability and investors digested dovish Fed signals. Canada’s exposure to oil remains supportive for the Loonie, while uncertainty about US involvement in the Iran-Israel conflict has limited USD demand.
Outlook: Retail Sales figures from Canada will be closely watched later today. Positive surprises could extend CAD gains, while any deterioration in crude oil demand may reverse momentum.
USD/CHF
Summary: USD/CHF remains above mid-0.8100s but lacks directional conviction. Safe-haven flows continue to support the Swiss Franc, especially as the situation in the Middle East evolves. The SNB’s recent move to cut rates to 0.00% disappointed some expectations for a return to negative rates, but its cautious inflation outlook remains supportive for CHF.
Outlook: Traders await updates on the Fed’s Monetary Policy Report and geopolitical headlines. USD/CHF may remain range-bound unless tensions flare or risk appetite meaningfully returns.
Final Summary
Currency markets remain cautious but less panicked after President Trump delayed a decision on striking Iran. The Pound slipped following unexpectedly weak retail sales, while the Euro held steady on hawkish ECB messaging. The Dollar softened slightly as risk aversion eased, aiding modest recoveries in the Aussie and Loonie. The Swiss Franc continues to benefit from geopolitical uncertainty, while markets eye upcoming data and policy updates for the next directional cues.